First of all, inflation. Standard dogma, that I'm not necessarily inclined to disagree with, is that it should be targeted around 2% per year.

Inflation targeting is sort of a cope that Central banks use to judge how monetary policy is received by the economic system, a confirmation if you will that their monetary policy adjustments have hopefully translated into growth and positive momentum in this case indicated by inflation of around 2%.

They have set this as a baseline expectation where when things go sideways or off trend they "do stuff" until the economic system gets back on trend growth and inflation (2%)

This is arguable but they have this 2% "target" because they don't actually do "money" in the real economy and this is one of the only ways of them being able to tell if they are having any impact.

Their job is to send signals into the economic and commercial banking system (that does do money) and hopefully it reacts in a way that eventually produces growth and inflation and the arbitrary baseline or reaction they have chosen to look for from a measurement standpoint from the economic system is 2% inflation and somewhat full employment.

In order to control inflation, the central bank has to create money commensurate with the desired inflation.

Traditionally the BOC will move the policy interest rate up, making the cost of capital more expensive in order to combat inflation, in order to try to have the economy generate inflation they "ease" and move the policy rate down (like now)

When trying to keep a lid on inflation they move the rate up, this limits new loans and dollars being created by the system, the demand for new money or loans will go down because the cost of capital is more expensive (more dollars chasing fewer goods) the idea being to limit new dollar creation by the system to balance this problem out and again return inflation to trend.

It does this by handing out loans at the federal interest rate to banks and corporations.

As far as I know and someone can correct me here, the Bank of Canada does not directly loan money to commercial banks unless it is through a special purpose vehicle where the bank or authorized participant swaps securities which can be cash like with the bank of canada. I guess you could consider that a securities loan and the securities are "money-like" I suppose.

But as far as the Bank of Canada backing up a truck of freshly printed cash and dumping it onto RoyalBanks balance sheet I don't think that's how it works.

From this hopefully you can build on your ideas here. There is money printing but it is the commercial banks that produce the majority of new dollars in circulation. Money is created upon loan creation via the commercial banking system and money is destroyed by repaying a loan, any interest that is accrued and paid upon that loan stays in circulation and is not destroyed.

This is why lending growth or contraction in the commercial banking system has such an enormous effect on our bank centered system. Commercial banks control money creation (largely) and Central banks try to send signals into that commercial banking system in an effort to cajole them into either expanding their activities (and balance sheets) or contracting their activities depending on conditions in the economy.

The intention would be to stop handing out money to banks and corporations but to hand it out to people instead

The meat of your point here is interesting though. Unfortunately the bank cannot hand out money to individuals in the same way it can a corporation.

Imagine we are a bank. The OmegaCanada bank...

We have a risk framework and some individual comes to us and says they want a loan for their risky business or for a used car or something.

As a bank we have to check if we have the balance sheet capacity for a really risky loan? Yes it is a higher rate we can charge but why take the risk when we can lend to a corporation (even a risky one) with established cash flow and better probability of paying back the loan.

Loan origination to Individuals outside of insured mortgages is just too risky these days for banks. There is so much debt, the sheer tonnage of debt in aggregate that is sitting on these banks balance sheets, the debt in the system is so enormous that the banks do not possess the balance sheet capacity to:

(a) take the kind of risk they used to take (b) extend credit or un-collateralized loans to individuals (c) (eventually in the future) they won't extend credit to a larger and larger slice of the corporations anymore either as the debt expands even further.

First of all, inflation. Standard dogma, that I'm not necessarily inclined to disagree with, is that it should be targeted around 2% per year.

Inflation targeting is sort of a cope that Central banks use to judge how monetary policy is received by the economic system, a confirmation if you will that their monetary policy adjustments have hopefully translated into growth and positive momentum in this case indicated by inflation of around 2%.

They have set this as a baseline expectation where when things go sideways or off trend they "do stuff" until the economic system gets back on trend growth and inflation (2%)

This is arguable but they have this 2% "target" because they don't actually do "money" in the real economy and this is one of the only ways of them being able to tell if they are having any impact.

Their job is to send signals into the economic and commercial banking system (that does do money) and hopefully it reacts in a way that eventually produces growth and inflation and the arbitrary baseline or reaction they have chosen to look for from a measurement standpoint from the economic system is 2% inflation and somewhat full employment.

In order to control inflation, the central bank has to create money commensurate with the desired inflation.

Traditionally the BOC will move the policy interest rate up, making the cost of capital more expensive in order to combat inflation, in order to try to have the economy generate inflation they "ease" and move the policy rate down (like now)

When trying to keep a lid on inflation they move the rate up, this limits new loans and dollars being created by the system, the demand for new money or loans will go down because the cost of capital is more expensive (more dollars chasing fewer goods) the idea being to limit new dollar creation by the system to balance this problem out and again return inflation to trend.

It does this by handing out loans at the federal interest rate to banks and corporations.

As far as I know and someone can correct me here, the Bank of Canada does not directly loan money to commercial banks unless it is through a special purpose vehicle where the bank or authorized participant swaps securities which can be cash like with the bank of canada. I guess you could consider that a securities loan and the securities are "money-like" I suppose.

But as far as the Bank of Canada backing up a truck of freshly printed cash and dumping it onto RoyalBanks balance sheet I don't think that's how it works.

From this hopefully you can build on your ideas here. There is money printing but it is the commercial banks that produce the majority of new dollars in circulation. Money is created upon loan creation via the commercial banking system and money is destroyed by repaying a loan, any interest that is accrued and paid upon that loan stays in circulation and is not destroyed.

This is why lending growth or contraction in the commercial banking system has such an enormous effect on our bank centered system. Commercial banks control money creation (largely) and Central banks try to send signals into that commercial banking system in an effort to cajole them into either expanding their activities (and balance sheets) or contract their activities depending on conditions in the economy.

The intention would be to stop handing out money to banks and corporations but to hand it out to people instead

The meat of your point here is interesting though. Unfortunately the bank cannot hand out money to individuals in the same way it can a corporation.

Imagine we are a bank. The OmegaCanada bank...

We have a risk framework and some individual comes to us and says they want a loan for their risky business or for a used car or something.

As a bank we have to check if we have the balance sheet capacity for a really risky loan? Yes it is a higher rate we can charge but why take the risk when we can lend to a corporation (even a risky one) with established cash flow and better probability of paying back the loan.

Loan origination to Individuals outside of insured mortgages is just too risky these days for banks. There is so much debt, the sheer tonnage of debt in aggregate that is sitting on these banks balance sheets, the debt in the system is so enormous that the banks do not possess the balance sheet capacity to:

(a) take the kind of risk they used to take (b) extend credit or un-collateralized loans to individuals (c) (eventually in the future) they won't extend credit to a larger and larger slice of the corporations anymore either as the debt expands even further.

First of all, inflation. Standard dogma, that I'm not necessarily inclined to disagree with, is that it should be targeted around 2% per year.

Inflation targeting is sort of a cope that Central banks use to judge how monetary policy is received by the economic system, a confirmation if you will that their monetary policy adjustments have hopefully translated into growth and positive momentum in this case indicated by inflation of around 2%.

They have set this as a baseline expectation where when things go sideways or off trend they "do stuff" until the economic system gets back on trend growth and inflation (2%)

This is arguable but they have this 2% "target" because they don't actually do "money" in the real economy and this is one of the only ways of them being able to tell if they are having any impact.

Their job is to send signals into the economic and commercial banking system (that does do money) and hopefully it reacts in a way that eventually produces growth and inflation and the arbitrary baseline or reaction they have chosen to look for from a measurement standpoint from the economic system is 2% inflation and somewhat full employment.

In order to control inflation, the central bank has to create money commensurate with the desired inflation.

Traditionally the BOC will move the policy interest rate up, making the cost of capital more expensive in order to combat inflation, in order to try to have the economy generate inflation they "ease" and move the policy rate down (like now)

When trying to keep a lid on inflation they move the rate up, this limits new loans and dollars being created by the system, the demand for new money or loans will go down because the cost of capital is more expensive (more dollars chasing fewer goods) the idea being to limit new dollar creation by the system to balance this problem out and again return inflation to trend.

It does this by handing out loans at the federal interest rate to banks and corporations.

As far as I know and someone can correct me here, the Bank of Canada does not directly loan money to commercial banks unless it is through a special purpose vehicle where the bank or authorized participant swaps securities which can be cash like with the bank of canada. I guess you could consider that a securities loan and the securities are "money-like" I suppose.

But as far as the Bank of Canada backing up a truck of freshly printed cash and dumping it onto RoyalBanks balance sheet I don't think that's how it works.

From this hopefully you can build on your ideas here. There is money printing but it is the commercial banks that produce the majority of new dollars in circulation. Money is created upon loan creation via the commercial banking system and money is destroyed by repaying a loan, any interest that is accrued and paid upon that loan stays in circulation and is not destroyed.

This is why lending growth or contraction in the commercial banking system has such an enormous effect on our bank centered system. Commercial banks control money creation (largely) and Central banks try to send signals into that commercial banking system in an effort to either expand their activities or contract their activities depending on conditions in the economy.

The intention would be to stop handing out money to banks and corporations but to hand it out to people instead

The meat of your point here is interesting though. Unfortunately the bank cannot hand out money to individuals in the same way it can a corporation.

Imagine we are a bank. The OmegaCanada bank...

We have a risk framework and some individual comes to us and says they want a loan for their risky business or for a used car or something.

As a bank we have to check if we have the balance sheet capacity for a really risky loan? Yes it is a higher rate we can charge but why take the risk when we can lend to a corporation (even a risky one) with established cash flow and better probability of paying back the loan.

Loan origination to Individuals outside of insured mortgages is just too risky these days for banks. There is so much debt, the sheer tonnage of debt in aggregate that is sitting on these banks balance sheets, the debt in the system is so enormous that the banks do not possess the balance sheet capacity to:

(a) take the kind of risk they used to take (b) extend credit or un-collateralized loans to individuals (c) (eventually in the future) they won't extend credit to a larger and larger slice of the corporations anymore either as the debt expands even further.

First of all, inflation. Standard dogma, that I'm not necessarily inclined to disagree with, is that it should be targeted around 2% per year.

Inflation targeting is sort of a cope that Central banks use to judge how monetary policy is received by the economic system, a confirmation if you will that their monetary policy adjustments have hopefully translated into growth and positive momentum in this case indicated by inflation of around 2%.

They have set this as a baseline expectation where when things go sideways or off trend they "do stuff" until the economic system gets back on trend growth and inflation (2%)

This is arguable but they have this 2% "target" because they don't actually do "money" in the real economy and this is one of the only ways of them being able to tell if they are having any impact.

Their job is to send signals into the economic and commercial banking system (that does do money) and hopefully it reacts in a way that eventually produces growth and inflation and the arbitrary baseline or reaction they have chosen to look for from a measurement standpoint from the economic system is 2% inflation and somewhat full employment.

In order to control inflation, the central bank has to create money commensurate with the desired inflation.

Traditionally the BOC will move the policy interest rate up, making the cost of capital more expensive in order to combat inflation, in order to try to have the economy generate inflation they "ease" and move the policy rate down (like now)

When trying to keep a lid on inflation they move the rate up, this limits new loans and dollars being created by the system, the demand for new money or loans will go down because the cost of capital is more expensive (more dollars chasing fewer goods) the idea being to limit new dollar creation by the system to balance this problem out and again return inflation to trend.

It does this by handing out loans at the federal interest rate to banks and corporations.

As far as I know and someone can correct me here, the Bank of Canada does not directly loan money to commercial banks unless it is through a special purpose vehicle where the bank or authorized participant swaps securities which can be cash like with the bank of canada. I guess you could consider that a securities loan and the securities are "money-like" I suppose.

But as far as the Bank of Canada backing up a truck of freshly printed cash and dumping it onto RoyalBanks balance sheet I don't think that's how it works.

From this hopefully you can build on your ideas here. There is money printing but it is the commercial banks that produce the majority of new dollars in circulation. Money is created upon loan creation via the commercial banking system and money is destroyed by repaying a loan, any interest that is accrued and paid upon that loan stays in circulation and is not destroyed.

This is why lending growth or contraction in the commercial banking system has such an enormous effect on our bank centered system. Commercial banks control money creation (largely) and Central banks try to send signals into that commercial banking system in an effort to either expand their activities or contract their activities depending on conditions in the economy.

The intention would be to stop handing out money to banks and corporations but to hand it out to people instead

The meat of your point here is interesting though. Unfortunately the bank cannot hand out money to individuals in the same way it can a corporation.

Imagine we are a bank. The OmegaCanada bank...

We have a risk framework and some individual comes to us and says they want a loan for their risky business or for a used car or something.

As a bank we have to check if we have the balance sheet capacity for a really risky loan? Yes it is a higher rate we can charge but why take the risk when we can lend to a corporation (even a risky one) with established cash flow and better probability of paying back the loan.

Loan origination to Individuals outside of insured mortgages is just too risky these days for banks. There is so much debt, the sheer tonnage of debt in aggregate that is sitting on these banks balance sheets, the debt in the system is so enormous that the banks do not possess the balance sheet capacity to:

(a) take the kind of risk they used to take (b) extend credit or un-collateralized loans to individuals (c) (eventually in the future) they won't extend credit to a larger and larger slice of the corporations anymore either as the debt expands even further.

First of all, inflation. Standard dogma, that I'm not necessarily inclined to disagree with, is that it should be targeted around 2% per year.

Inflation targeting is sort of a cope that Central banks use to judge how monetary policy is received by the economic system, a confirmation if you will that their monetary policy adjustments have hopefully translated into growth and positive momentum in this case indicated by inflation of around 2%.

They have set this as a baseline expectation where when things go sideways or off trend they "do stuff" until the economic system gets back on trend growth and inflation (2%)

This is arguable but they have this 2% "target" because they don't actually do "money" in the real economy and this is one of the only ways of them being able to tell if they are having any impact.

Their job is to send signals into the economic and commercial banking system (that does do money) and hopefully it reacts in a way that eventually produces growth and inflation and the arbitrary baseline or reaction they have chosen to look for from a measurement standpoint from the economic system is 2% inflation and somewhat full employment.

In order to control inflation, the central bank has to create money commensurate with the desired inflation.

Traditionally the BOC will move the policy interest rate up, making the cost of capital more expensive in order to combat inflation, in order to try to have the economy generate inflation they "ease" and move the policy rate down (like now)

When trying to keep a lid on inflation they move the rate up, this limits new loans and dollars being created by the system, the demand for new money or loans will go down because the cost of capital is more expensive (more dollars chasing fewer goods) the idea being to limit new dollar creation by the system to balance this problem out and again return inflation to trend.

It does this by handing out loans at the federal interest rate to banks and corporations.

As far as I know and someone can correct me here, the Bank of Canada does not directly loan money to commercial banks unless it is through a special purpose vehicle where the bank or authorized participant parks money on deposit and the fed swaps for interest paying securities in return. I guess you could consider that a securities loan.

But as far as the Bank of Canada backing up a truck of freshly printed cash and dumping it onto RoyalBanks balance sheet I don't think that's how it works.

From this hopefully you can build on your ideas here. There is money printing but it is the commercial banks that produce the majority of new dollars in circulation. Money is created upon loan creation via the commercial banking system and money is destroyed by repaying a loan, any interest that is accrued and paid upon that loan stays in circulation and is not destroyed.

This is why lending growth or contraction in the commercial banking system has such an enormous effect on our bank centered system. Commercial banks control money creation (largely) and Central banks try to send signals into that commercial banking system in an effort to either expand their activities or contract their activities depending on conditions in the economy.

The intention would be to stop handing out money to banks and corporations but to hand it out to people instead

The meat of your point here is interesting though. Unfortunately the bank cannot hand out money to individuals in the same way it can a corporation.

Imagine we are a bank. The OmegaCanada bank...

We have a risk framework and some individual comes to us and says they want a loan for their risky business or for a used car or something.

As a bank we have to check if we have the balance sheet capacity for a really risky loan? Yes it is a higher rate we can charge but why take the risk when we can lend to a corporation (even a risky one) with established cash flow and better probability of paying back the loan.

Loan origination to Individuals outside of insured mortgages is just too risky these days for banks. There is so much debt, the sheer tonnage of debt in aggregate that is sitting on these banks balance sheets, the debt in the system is so enormous that the banks do not possess the balance sheet capacity to:

(a) take the kind of risk they used to take (b) extend credit or un-collateralized loans to individuals (c) (eventually in the future) they won't extend credit to a larger and larger slice of the corporations anymore either as the debt expands even further.

First of all, inflation. Standard dogma, that I'm not necessarily inclined to disagree with, is that it should be targeted around 2% per year.

Inflation targeting is sort of a cope that Central banks use to judge how monetary policy is received by the economic system, a confirmation if you will that their monetary policy adjustments have hopefully translated into growth and positive momentum in this case indicated by inflation of around 2%.

They have set this as a baseline expectation where when things go sideways or off trend they "do stuff" until the economic system gets back on trend growth and inflation (2%)

This is arguable but they have this 2% "target" because they don't actually do "money" in the real economy and this is one of the only ways of them being able to tell if they are having any impact.

Their job is to send signals into the economic and commercial banking system (that does do money) and hopefully it reacts in a way that eventually produces growth and inflation and the arbitrary baseline or reaction they have chosen to look for from a measurement standpoint from the economic system is 2% inflation and somewhat full employment.

In order to control inflation, the central bank has to create money commensurate with the desired inflation.

Traditionally the BOC will move the policy interest rate up, making the cost of capital more expensive in order to combat inflation, in order to try to have the economy generate inflation they "ease" and move the policy rate down (like now)

When trying to keep a lid on inflation they move the rate up, this limits new loans and dollars being created by the system, the demand for new money or loans will go down because the cost of capital is more expensive (more dollars chasing fewer goods) the idea being to limit new dollar creation by the system to balance this problem out and again return inflation to trend.

It does this by handing out loans at the federal interest rate to banks and corporations.

As far as I know and someone can correct me here, the Bank of Canada does not directly loan money to commercial banks unless it is through a special purpose vehicle where the bank or authorized participant parks money on deposit and the fed swaps for interest paying securities in return. I guess you could consider that a securities loan.

But as far as the Bank of Canada backing up a truck of freshly printed cash and dumping it onto RoyalBanks balance sheet I don't think that's how it works.

From this hopefully you can build on your ideas here. There is money printing but it is the commercial banks that produce the majority of new dollars in circulation. Money is created upon loan creation via the commercial banking system and money is destroyed by repaying a loan, any interest that is accrued and paid upon that loan stays in circulation and is not destroyed.

This is why lending growth or contraction in the commercial banking system has such an enormous effect on our bank centered system. Commercial banks control money creation (largely) and Central banks try to send signals into that commercial banking system in an effort to either expand their activities or contract their activities depending on conditions in the economy.

The intention would be to stop handing out money to banks and corporations but to hand it out to people instead

The meat of your point here is interesting though. Unfortunately the bank cannot hand out money to individuals in the same way it can a corporation.

Imagine we are a bank. The OmegaCanada bank...

We have a risk framework and some individual comes to us and says they want a loan for their risky business or for a used car or something.

As a bank we have to check if we have the balance sheet capacity for a really risky loan? Yes it is a higher rate we can charge but why take the risk when we can lend to a corporation (even a risky one) with established cash flow and better probability of paying back the loan.

Loan origination to Individuals outside of insured mortgages is just too risky these days for banks. There is so much debt, the sheer tonnage of debt in aggregate that is sitting on these banks balance sheets, the debt in the system is so enormous that the banks do not possess the balance sheet capacity to:

(a) take the kind of risk they used to take (b) extend credit or un-collateralized loans to individuals (c) eventually in the future they won't even lend to a larger and larger slice of the corporations anymore as the debt expands even further.

First of all, inflation. Standard dogma, that I'm not necessarily inclined to disagree with, is that it should be targeted around 2% per year.

Inflation targeting is sort of a cope that Central banks use to judge how monetary policy is received by the economic system, a confirmation if you will that their monetary policy adjustments have hopefully translated into growth and positive momentum in this case indicated by inflation of around 2%.

They have set this as a baseline expectation where when things go sideways or off trend they "do stuff" until the economic system gets back on trend growth and inflation (2%)

This is arguable but they have this 2% "target" because they don't actually do "money" in the real economy and this is one of the only ways of them being able to tell if they are having any impact.

Their job is to send signals into the economic and commercial banking system (that does do money) and hopefully it reacts in a way that eventually produces growth and inflation and the arbitrary baseline or reaction they have chosen to look for from a measurement standpoint from the economic system is 2% inflation and somewhat full employment.

In order to control inflation, the central bank has to create money commensurate with the desired inflation.

Traditionally the BOC will move the policy interest rate up, making the cost of capital more expensive in order to combat inflation, in order to try to have the economy generate inflation they "ease" and move the policy rate down (like now)

When trying to keep a lid on inflation they move the rate up, this limits new loans and dollars being created by the system, the demand for new money or loans will go down because the cost of capital is more expensive (more dollars chasing fewer goods) the idea being to limit new dollar creation by the system to balance this problem out and again return inflation to trend.

It does this by handing out loans at the federal interest rate to banks and corporations.

As far as I know and someone can correct me here, the Bank of Canada does not directly loan money to commercial banks unless it is through a special purpose vehicle where the bank or authorized participant parks money on deposit and the fed swaps for interest paying securities in return. I guess you could consider that a securities loan.

But as far as the Bank of Canada backing up a truck of freshly printed cash and dumping it onto RoyalBanks balance sheet I don't think that's how it works.

From this hopefully you can build on your ideas here. There is money printing but it is the commercial banks that produce the majority of new dollars in circulation. Money is created upon loan creation via the commercial banking system and money is destroyed by repaying a loan, any interest that is accrued and paid upon that loan stays in circulation and is not destroyed.

This is why lending growth or contraction in the commercial banking system has such an enormous effect on our bank centered system. Commercial banks control money creation (largely) and Central banks try to send signals into that commercial banking system in an effort to either expand their activities or contract their activities depending on conditions in the economy.

The intention would be to stop handing out money to banks and corporations but to hand it out to people instead

The meat of your point is correct though. Imagine we are a bank. The OmegaCanada bank...

You have a risk framework and some individual comes to you and says they want a loan for their risky business. Do you have the balance sheet capacity for a risky loan? Yes it is a higher rate but why take the risk when you can lend to a corporation (even a risky one) with established cash flow and better probability of paying back the loan.

Loan origination to Individuals outside of insured mortgages is just too risky these days for banks. There is so much debt in aggregate in the system that the banks do not possess the balance sheet capacity to:

(a) take the kind of risk they used to take (b) extend credit or un-collateralized loans to individuals

First of all, inflation. Standard dogma, that I'm not necessarily inclined to disagree with, is that it should be targeted around 2% per year.

Inflation targeting is sort of a cope that Central banks use to judge how monetary policy is received by the economic system, a confirmation if you will that their monetary policy adjustments have hopefully translated into growth and positive momentum in this case indicated by inflation of around 2%.

They have set this as a baseline expectation where when things go sideways or off trend they "do stuff" until the economic system gets back on trend growth and inflation (2%)

This is arguable but they have this 2% "target" because they don't actually do "money" in the real economy and this is one of the only ways of them being able to tell if they are having any impact.

Their job is to send signals into the economic and commercial banking system (that does do money) and hopefully it reacts in a way that eventually produces growth and inflation and the arbitrary baseline or reaction they have chosen to look for from a measurement standpoint from the economic system is 2% inflation and somewhat full employment.

In order to control inflation, the central bank has to create money commensurate with the desired inflation.

Traditionally the BOC will move the policy interest rate up, making the cost of capital more expensive in order to combat inflation, in order to try to have the economy generate inflation they "ease" and move the policy rate down (like now)

When trying to keep a lid on inflation they move the rate up, this limits new loans and dollars being created by the system, the demand for new money or loans will go down because the cost of capital is more expensive (more dollars chasing fewer goods) the idea being to limit new dollar creation by the system to balance this problem out and again return inflation to trend.

It does this by handing out loans at the federal interest rate to banks and corporations.

As far as I know and someone can correct me here, the Bank of Canada does not directly loan money to commercial banks unless it is through a special purpose vehicle where the bank or authorized participant parks money on deposit and the fed swaps for interest paying securities in return. I guess you could consider that a securities loan.

But as far as the Bank of Canada backing up a truck of freshly printed cash and dumping it onto RoyalBanks balance sheet I don't think that's how it works.

From this hopefully you can build on your ideas here. There is money printing but it is the commercial banks that produce the majority of new dollars in circulation. Money is created upon loan creation via the commercial banking system and money is destroyed by repaying a loan, any interest that is accrued and paid upon that loan stays in circulation and is not destroyed.

This is why lending growth or contraction in the commercial banking system has such an enormous effect on our bank centered system. Commercial banks control money creation (largely) and Central banks try to send signals into that commercial banking system in an effort to either expand their activities or contract their activities depending on conditions in the economy.

The meat of your point is correct though. Imagine we are a bank. The OmegaCanada bank...

You have a risk framework and some individual comes to you and says they want a loan for their risky business. Do you have the balance sheet capacity for a risky loan? Yes it is a higher rate but why take the risk when you can lend to a corporation (even a risky one) with established cash flow and better probability of paying back the loan.

Loan origination to Individuals outside of insured mortgages is just too risky these days for banks. There is so much debt in aggregate in the system that the banks do not possess the balance sheet capacity to:

(a) take the kind of risk they used to take (b) extend credit or un-collateralized loans to individuals

First of all, inflation. Standard dogma, that I'm not necessarily inclined to disagree with, is that it should be targeted around 2% per year.

Inflation targeting is sort of a cope that Central banks use to judge how monetary policy is received by the economic system, a confirmation if you will that their monetary policy adjustments have hopefully translated into growth and positive momentum in this case indicated by inflation of around 2%.

They have set this as a baseline expectation where when things go sideways or off trend they "do stuff" until the economic system gets back on trend growth and inflation (2%)

This is arguable but they have this 2% "target" because they don't actually do "money" in the real economy and this is one of the only ways of them being able to tell if they are having any impact.

Their job is to send signals into the economic and commercial banking system (that does do money) and hopefully it reacts in a way that eventually produces growth and inflation and the arbitrary baseline or reaction they have chosen to look for from a measurement standpoint from the economic system is 2% inflation and somewhat full employment.

In order to control inflation, the central bank has to create money commensurate with the desired inflation.

Traditionally the BOC will move the policy interest rate up, making the cost of capital more expensive in order to combat inflation, in order to try to have the economy generate inflation they "ease" and move the policy rate down (like now)

When trying to keep a lid on inflation they move the rate up, this limits new loans and dollars being created by the system, the demand for new money or loans will go down because the cost of capital is more expensive (more dollars chasing fewer goods) the idea being to limit new dollar creation by the system to balance this problem out and again return inflation to trend.

It does this by handing out loans at the federal interest rate to banks and corporations.

As far as I know and someone can correct me here, the Bank of Canada does not directly loan money to commercial banks unless it is through a special purpose vehicle where the bank or authorized participant parks money on deposit and the fed swaps for interest paying securities in return. I guess you could consider that a securities loan.

But as far as the Bank of Canada backing up a truck of freshly printed cash and dumping it onto RoyalBanks balance sheet I don't think that's how it works.

From this hopefully you can build on your ideas here. There is money printing but it is the commercial banks that produce the majority of new dollars in circulation. Money is created upon loan creation via the commercial banking system and money is destroyed by repaying a loan, any interest that is accrued and paid upon that loan stays in circulation and is not destroyed.

This is why lending growth or contraction in the commercial banking system has such an enormous effect on our bank centered system. Commercial banks control money creation (largely) and Central banks try to send signals into that commercial banking system in an effort to either expand their activities or contract their activities depending on conditions in the economy.

First of all, inflation. Standard dogma, that I'm not necessarily inclined to disagree with, is that it should be targeted around 2% per year.

Inflation targeting is sort of a cope that Central banks use to judge how monetary policy is received by the economic system, a confirmation if you will that their monetary policy adjustments have hopefully translated into growth and positive momentum in this case indicated by inflation of around 2%.

They have set this as a baseline expectation where when things go sideways or off trend they "do stuff" until the economic system gets back on trend growth and inflation (2%)

This is arguable but they have this 2% "target" because they don't actually do "money" in the real economy and this is one of the only ways of them being able to tell if they are having any impact.

Their job is to send signals into the economic and commercial banking system (that does do money) and hopefully it reacts in a way that eventually produces growth and inflation and the arbitrary baseline or reaction they have chosen to look for from a measurement standpoint from the economic system is 2% inflation and somewhat full employment.

In order to control inflation, the central bank has to create money commensurate with the desired inflation.

Traditionally the BOC will move the policy interest rate up, making the cost of capital more expensive in order to combat inflation. This limits new loans and dollars being created by the system. (more dollars chasing fewer goods) the idea being to limit new dollar creation by the system to balance this problem out and again return inflation to trend.

It does this by handing out loans at the federal interest rate to banks and corporations.

As far as I know and someone can correct me here, the Bank of Canada does not directly loan money to commercial banks unless it is through a special purpose vehicle where the bank or authorized participant parks money on deposit and the fed swaps for interest paying securities in return. I guess you could consider that a securities loan.

But as far as the Bank of Canada backing up a truck of freshly printed cash and dumping it onto RoyalBanks balance sheet I don't think that's how it works.

From this hopefully you can build on your ideas here. There is money printing but it is the commercial banks that produce the majority of new dollars in circulation. Money is created upon loan creation via the commercial banking system and money is destroyed by repaying a loan, any interest that is accrued and paid upon that loan stays in circulation and is not destroyed.

This is why lending growth or contraction in the commercial banking system has such an enormous effect on our bank centered system. Commercial banks control money creation (largely) and Central banks try to send signals into that commercial banking system in an effort to either expand their activities or contract their activities depending on conditions in the economy.