Commentary Archives - Centre for Future Work

Trump Launches New Attack Against Canada’s Currency

Jim Stanford — Fri, 11 Sep 2026 18:37:01 +0000

U.S. President Donald Trump has opened another front in his trade war against Canada, suggesting that Canada is taking advantage of the U.S. through its currency. Both currencies are called the dollar, but Canada’s trades for less than the U.S. currency, and Trump argues this creates an unfair advantage.

More than 25 countries in the world have a currency called “the dollar”. Apparently, according to Donald Trump, 24 of them must be taking advantage of America because their dollars are different from his.

Canada has had a flexible exchange rate since 1970 (and also had a flexible rate between 1950 and 1962). It was one of the first industrial countries to abandon fixed exchange rates as the Bretton Woods financial system was dismantled in the early 1970s. The exchange rate is determined by numerous factors, including financial capital flows, comparative interest rates, comparative inflation, and investor expectations. The present exchange rate (about 72 cents U.S.) is well within the range of its historical fluctuations, and is in fact slightly stronger than when Trump took office for the second time in January 2025.

Of course, the fact that America’s dollar is used (for now, anyway) as a global reserve currency, hence allowing the US to run trade deficits every year for 50 years, is a unique privilege, not a sign of victimisation. America consumes far more than it produces, year after year. But inflows of capital from other countries, and holdings of U.S. dollars by foreign investors and institutions, allow the U.S. to maintain this ongoing trade deficit.

The world (including Canada) supplies the US with trillions of dollars of purchasing power every year, allowing this permanent trade deficit to continue. We explained this relationship in our research report, Who’s Subsidizing Whom? Over the past decade, new purchases of U.S. debt (mostly from the federal government) have almost perfectly offset the cumulative U.S. bilateral trade deficit with Canada over that same period. In short, it is Canada subsidizing America (with transfers of money), not the other way around.

Centre for Future Work Director Jim Stanford commented on Trump’s arguments about the currency on Global News’ national television broadcast.

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Canada-U.S. Employment Contrast Shows Trump’s Tariffs are not Working

James — Mon, 10 Aug 2026 18:32:14 +0000

On August 7 both Statistics Canada and the U.S. Bureau of Labor Statistics released their monthly labour force reports (for July). The stark contrast in the two trends certainly strengthens Canada’s hand in ongoing trade talks with Trump. Canada created 75,000 jobs in July. The U.S. lost 23,000 jobs by one measure (the payroll survey of employers), 87,000 by another (the household survey of workers).

But the longer-term trends also refute Trump’s chaotic economic and geopolitical policies. Since January 2025 (his second inauguration), US employment has declined by 1.0% (by the household survey), the unemployment rate has grown, and the participation rate (which has been much lower than Canada’s for years) has fallen much more.

In Canada, employment rose 1% in the same time, the unemployment rate fell, and the participation rate (which reflects both demographic and cyclical factors) declined 0.4 percentage points (one third as much as in the US). Even in manufacturing, the target for Trump’s tariffs, the US has lost more jobs than Canada since Trump returned to office. This is also true in the high-profile auto sector, which Trump claims should completely relocate to the US: it is losing jobs much faster in the US than in Canada.

Real wages are growing in Canada, but falling in the US. This reflects both strong wage growth here, and slower inflation.

Trump’s policies were never about protecting American workers. They are about weaponizing popular discontent and misdirecting it against foreigners—rather than against the billionaires whose interests he promotes. The longer he’s in power, the weaker the US economy becomes, the worse off are American workers, and the more dismal do his mid-term prospects appear.

Also, the worse the US economy gets, the weaker is Trump’s bargaining position in trade talks (including with Canada and Mexico). With Republicans down badly in the polls as mid-term elections approach, Trump’s tariff war is losing credibility at home quickly.

In short, Trump’s pledge to use “economic force” to annex Canada is backfiring badly. Labour market trends show both that Canada’s economy is more resilient than most expected, but also that Trump’s bargaining position will weaken as more US jobs are lost to his misguided tariffs.

Centre for Future Work Director Jim Stanford discussed the July employment numbers, and the contrast between Canada and the U.S., on CBC News Network with host Lien Yeung.

One nerdy data note: The US releases its payroll and household surveys the same day. The series differ for various reasons, such as self-employment & agriculture (not counted in the payroll data), and multiple job-holding (which inflates payroll employment). US household data has been weaker than payroll data under Trump’s second term, in part because it does count agricultural employment (which has been hurt badly by Trump’s repressive immigration policies).

Canada’s payroll data (from the SEPH series) comes out a few weeks later than the household survey data discussed above, so we can’t make a direct Canada-US comparison for payroll employment in July yet. For May (the most recent Canadian payroll data), Canadian payroll employment was up 0.5% from January 2025, vs a 0.4% increase in the US (both seasonally adjusted). That gap will have widened since May, which will be confirmed when the July data comes out for Canada.

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Trump Hits Canada and Others With Still More Tariffs

Jim Stanford — Tue, 28 Jul 2026 04:43:46 +0000

As negotiations among the U.S., Canada, and Mexico continue over the review and renewal of the Canada-U.S.-Mexico Agreement (CUSMA), U.S. President Donald Trump has ratcheted up his aggressive tariff threats against Canada and other countries. This follows his usual ‘Art of the Deal’ strategy, which is to create chaos, threaten harm, extract concessions (often marginal), and then claim historic victory.

Two sets of new tariffs have been announced in the last week:

Under Section 338 of U.S. trade law, Trump announced punitive 50% tariffs against over 500 different products from Canada, supposedly in response to ‘discriminatory’ treatment of U.S.-made autos, liquor, and dairy products. His complaints about discriminatory treatment are laughable, since these so-called ‘irritants’ were counter-measures imposed against Trump’s unilateral escalation of tariffs against Canada last year. The tariffs will come into effect August 19, unless some new trade deal between the two countries is reached by then. The products covered by these tariffs constitute about 4-5% of Canada’s exports to the U.S., and there will be no exemption for products qualifying under the existing CUSMA. This will cause an incremental increase in overall weighted-average tariffs on Canadian products. The regional impact of the tariffs is quite diverse: exports from B.C., Ontario,, and Quebec are hit hardest, while exports from Alberta, Saskatchewan, and Newfoundland & Labrador (concentrated in energy and potash, two products which the U.S. desperately needs). Given U.S. interference in the debate over Alberta separatism, many analysts suspect this regional differentiation is quite deliberate, intended to further inflame tensions between the provinces in how to respond to the U.S. attacks.
Days later, under Section 301 of U.S. trade law, Trump announced new across-the-board tariffs against some 80 countries, including Canada and all other top U.S. trading partners, supposedly to combat the use of forced labour in production of traded products. The affected countries supposedly have not taken adequate measures to prevent use of products made with forced labour in their own supply chains, thus indirectly facilitating the continuation of forced labour. Coming from the country which has by far the weakest protections for labour standards (including the use of prison labour in for-profit companies), this is not believable. In reality, Trump seized on this measure to justify reimposition of the across-the-board ‘Liberation Day’ tariffs that were struck down by the U.S. Supreme Court earlier this year.

In online commentary, Centre for Future Work Director Jim Stanford highlighted the hypocrisy of the U.S. invoking fake concern over labour freedoms to justify these new Section 301 trade attacks:

“The U.S. uses prison labour (incl. for private firms) more than any other country, hasn’t raised its min. wage ($7.25/hr) since 2009, and violates dozens of international labour standards every day. So Trump’s new Section 301 tariffs have nothing to do with concern for labour. They are a laughably transparent effort to replace the Liberation Day tariffs struck down by his own (stacked ) Supreme Court. They apply to all of the U.S.’s top trading partners–INCLUDING those who signed ‘deals’ with him, and those with whom the U.S. runs trade SURPLUSES. So if misery loves company, Canada should feel better. These new tariffs will hurt other U.S. trading partners as badly as the new Section 338 tariffs he announced this week will hurt Canada. But the biggest loser from this entire clown show is the U.S. Inflation, manufacturing job loss, declining real incomes, and general uncertainty will get worse. His war in the Persian Gulf is still going badly. And his mid-term prospects are grimmer than ever (hence his trying to rekindle trade wars).”

Stanford also appeared on CBC News Network’s show Ian Hanomansing Tonight to discuss the new tariffs, and how Canada should respond. He pointed out that at least 80 of the products targeted by Trump’s new Section 388 tariffs against Canada are items that Canada does not export to the U.S. They are thus ‘tariffs on nothing’, reinforcing that the threats are mostly about the theatre of negotiations more than any genuine economic goals. These ‘tariffs on nothing’ are the equivalent for Canada of the ridiculous ‘Liberation Day’ tariffs that Trump imposed in April 2025 on over 100 countries around the world – including uninhabited Antarctic islands!

Stanford also warned that even if Canada reaches a new trade deal with the U.S., we can have no confidence that he would live up to its terms. After all, many of the so-called ‘deals’ which Trump reached with various countries in the last year have been reneged on, or superseded by his new tariffs (such as the new Section 301 tariffs, which apply to all top trading partners of the U.S. – including those, like Australia, with which the U.S. runs trade surpluses). The CUSMA itself we negotiated by Trump himself during his first term, and lauded by him at the time as the greatest trade deal in history, yet he has violated its terms without hesitation in his second term. And U.S. demands to rewrite the contractual terms of the Gordie Howe Bridge (paid for my Canada under an agreement with the U.S. signed ) is further proof that any ‘deal’ with the U.S. is very fragile.

Given the unreliability of U.S. commitments on any trade issue, therefore, it is all the more important for Canadian negotiators to proceed with caution in negotiations around a revised trade deal. Complaints that Canada has not reached a quick deal with the U.S. are misplaced. Other countries which hoped they could avoid the impacts of Trump’s tariffs by giving up concessions in a ‘deal’ (like the EU, Japan, the UK, or India) have been victimized by subsequent U.S. trade actions as badly (or worse) than Canada. As our Centre argued a year ago (in the research paper, A Bad Deal with Trump is Worse then No Deal at All), Canada’s negotiators need to hold firm on the requirement that U.S. tariffs (especially the targeted sectoral tariffs that are traumatizing key industries like auto, steel, and forestry) are removed as part of any comprehensive deal.

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Auto Talks a Chance to Reinforce the Canadian Industry’s Lasting Potential

Jim Stanford — Tue, 30 Jun 2026 01:54:13 +0000

As Canada’s auto industry grapples with the fallout from Donald Trump’s erratic and mutually-damaging tariffs, the union representing auto workers has opened its triennial round of major bargaining with the major North American automakers. First up will be talks with Ford, which has invested $5 billion in its Canadian operations despite the tariffs. In this commentary, originally published in the Toronto Star, Centre for Future Work Director Jim Stanford discusses the importance of this bargaining in enhancing stability for both workers and the automakers, and showcasing the advantages of Canadian auto manufacturing – advantages which, he argues, will outlast Trump.

Despite Trump tariffs, Unifor talks with Ford the perfect moment to showcase Canada’s auto sector

By Jim Stanford

Canada’s auto industry is reeling from Donald Trump’s trade war. His 25% tariff on vehicles and some auto parts had immediate impact on Canadian vehicle production, employment, and exports, which all slumped badly after he imposed it last year.

But the longer-run threat facing auto is even worse. The tariff destroys the business case for making cars in Canada, given that 90 percent of our output goes to the U.S. – a geographic reality that has been true since the 1960s.

And that is exactly Donald Trump’s goal. He wants all North American production to relocate to the U.S. His Commerce Secretary Howard Lutnick put it bluntly: “Car assembly is going to be in America and there is nothing Canada can do about it.” Last month U.S. Trade Representative Jamieson Greer echoed that view, asking “Why do we make cars in Canada?”

Into this turbulent arena marched two negotiating teams last week: bargainers for Unifor, the auto union, and Ford Motor Company. The two sides kicked off triennial contract talks in Toronto, hoping to reach a new collective agreement for Ford’s 5000 Canadian workers by a July 10 deadline.

One might think this is a terrible time to negotiate a labour contract – with many workers on layoff, and uncertainty hanging thick. But given the unfortunate reality of Trump’s tariffs, stakeholders must deal with the world as it is, not how they wish it was.

In fact, these talks are an opportunity to remind businesses and governments on both sides of the border why Canada is a great place to build cars.

Both the union and the company emphasized these negotiations as an opportunity to impart some badly-needed stability to an industry beset by Trump-induced chaos. The union, of course, puts priority on job security for its members at Ford’s operations: the Oakville assembly plant, two major engine factories in Windsor, and three parts distribution centres.

But the company needs stability, too. The Oakville plant is launching a new generation of pickup trucks. This represents a massive investment by Ford, which has pumped $5 billion of capital into Canadian plants despite Trump’s actions.

Any vehicle launch is a complex, sensitive moment for an assembly plant. But the Oakville launch is particularly fine-tuned: the company will produce several specialized variants of large trucks on the same assembly line.

Ford is also launching a new high-feature engine at its Essex plant in Windsor. These two simultaneous product launches underscore the value to Ford of a smooth round of bargaining.

That the two sides have set an internal bargaining deadline two months before the current contract expires (when a strike or lockout would become legal) is a clear indication they aim to reach agreement without a work stoppage, if possible.

The intricate cross-border nature of Ford’s supply chain serves as a parable for the whole industry. Ford’s Canadian-built engines flow to 12 different U.S. and Mexican assembly plants (as well as Oakville). And its Oakville trucks encompass hundreds of different parts made across the U.S. and Mexico. A disruption in any of those cross-border flows (whether from a tariff or anything else) hurts everyone.

That’s why the automakers themselves are dead-set against Trump’s destructive strategy: it’s cost them billions in needless costs, lost efficiency, and supply-chain uncertainty.

Despite recent tribulations, auto is still Canada’s most important manufacturing sector. 120,000 Canadians are directly employed in auto and parts production – and that many again in the upstream supply chain that feeds auto plants with an incredible array of inputs, materials, machinery, and services.

These are high-productivity jobs, supporting good wages and benefits, and anchoring billions of dollars in GDP, downstream consumer spending, and government revenues. Canadian auto plants have higher productivity, better quality, and lower labour costs than in the U.S.

So to answer Greer’s insulting question, we make cars in Canada because we’re better at it than Americans. Not to mention because we spend $100 billion buying 2 million new cars every year, and hence deserve a fair share of the jobs that come with that demand.

A fair and productive round of bargaining, nailing down new investment and securing jobs, would be a powerful and tangible demonstration that this industry is here to stay – long after Trump is gone.

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Webinar on New Report: A Sequel We Don’t Want

Jim Stanford — Tue, 16 Jun 2026 18:35:42 +0000

The Centre for Future Work recently hosted a webinar presenting results from its new report, A Sequel We Don’t Want: What the 2026 Oil Price Shock Will Cost Canadians.

The webinar featured presentations from Jim Stanford (Centre for Future Work Director, and author of the report), Atiya Jaffar (Canada Country Manager from 350.org, sponsor of a campaign for an excess profit tax on petroleum companies), and DT Cochrane (Senior Economist at the Canadian Labour Congress).

It explains the likely effects of the new global oil price shock on Canadian consumers, inflation, and interest rates. It predicts at least $50 billion in higher direct and indirect costs for consumers (including the flow-through effects of higher oil prices on prices of other products, ranging from transportation to food to housing). It also warned of the possibility of higher interest rates and even slower economic growth.

Please view the entire one-hour webinar on the Centre’s You Tube channel.

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Oil Price Spike Causing More Trouble for Canada’s Economy

Jim Stanford — Tue, 16 Jun 2026 18:29:27 +0000

Centre for Future Work Economist and Director Jim Stanford was recently interviewed on CBC News Channel regarding the outlook for Canada’s economy. He stressed that growth has been near-zero since U.S. president Donald Trump launched his trade war through big tariffs on Canadian exports. He also explained how high oil prices resulting from Trump’s attacks on Iran and the resulting disruption in global oil supplies would affect inflation in Canada, citing findings from the Centre’s recent report on the inflationary impacts of the war.

Please see the full interview here.

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Political Drama Over Technical Recession Not Justified

Jim Stanford — Tue, 16 Jun 2026 03:03:19 +0000

Canada’s economy has been growing very slowly for the last year, since Donald Trump launched his trade war against Canada’s exports. The side-effects of Trump’s attacks against Iran (including high oil prices and accelerating inflation) have further undermined growth in Canada.

Recent Statistics Canada data indicate that real GDP in Canada (adjusted for inflation) declined very slightly (by 0.036%) in the first quarter of 2026. Coming on the heels of a larger decline in real GDP in the final quarter of 2025, this signifies that Canada is experiencing a ‘technical recession” – traditionally defined as two consecutive quarters of contraction in real GDP.

There is no doubt that Canada’s economy faces serious headwinds, primarily the decline in exports to the U.S. and weak business capital spending (hurt by the uncertainty surrounding the trade environment and the economic outlook). As Centre for Future Work Director says in this commentary, originally published in the Toronto Star, whether the resulting growth is slightly above or slightly zero is not meaningful for economic policy decisions.

A technical recession is more about politics than economics

By Jim Stanford

Statistics Canada recently released its quarterly report on Canadian GDP, covering the first three months of 2026. Most economists had expected a modest increase in GDP, but the final number came in slightly below zero.

Coming on top of a small decline in the last quarter of 2025, this means Canada has experienced what is commonly called a ‘technical recession’: two consecutive quarters of shrinking real GDP (adjusted for inflation).

Opposition politicians jumped on this report as evidence that Canada’s economy is being mismanaged. They were joined by Pete Hoekstra, the famously undiplomatic U.S. ambassador to Canada, who cited the data to renew his call for Canada to become the 51st state.

‘Technical recession’ is a very rough-and-ready benchmark commonly used to determine whether the economy is shrinking. One-quarter declines in real GDP often occur, without signalling serious economy-wide trouble.

The two-quarter rule is only slightly more robust. But it is still arbitrary and subjective, and doesn’t necessarily say much about what’s actually happening in the economy.

The U.S. follows a much stricter definition. A technical committee at the National Bureau of Economic Research (NBER) monitors dozens of indicators, including employment, consumer spending, and business investment. Only when there is widespread evidence of significant contraction “spread across the economy and last[ing] more than a few months,” will it declare a recession.

Even as technical recessions go, this one is as ‘technical’ as they can get. Both of the quarters in question registered tiny declines in measured real GDP. And both of those declines reflected unusual statistical quirks, more than evidence of broader economic contraction.

In the fourth quarter of 2025, GDP declined solely because businesses sharply reduced excess inventories accumulated earlier in the year, after Donald Trump started his trade war. Statistics Canada accounts for inventory reductions as a charge against GDP. Excluding that $13 billion drawdown, GDP would have grown a modest 0.3 percent.

Then in the first quarter of 2026, GDP shrank because of an unusual surge in gold imports, which rose (coincidentally also by $13 billion) as industrial users and financial investors took advantage of softer gold prices. Without that temporary inflow of gold, GDP would have grown 0.5 percent.

So in neither case was the broader economy genuinely shrinking. Canada’s economy is not in recession, in any economically meaningful sense. This week’s strong labour force report, showing Canada created 88,000 jobs in May, confirms the economy is still growing, albeit too slowly.

Opposition politicians see the technical recession as great fodder for memes and sound bites. Indeed, Conservative leader Pierre Poilievre talked of virtually nothing else last week. Politicians should be careful, however, about putting too much emphasis on this single, arbitrary metric.

Statistics Canada regularly revises its GDP data on the basis of new information. The decline in first-quarter GDP was so tiny (just $900 million out of a $3 trillion economy, or 0.036%) it could easily switch positive with the next revision. In fact, that decline was so small Statistics Canada’s official release stated that GDP was “unchanged” – a nuance lost in the histrionics of Question Period.

Just such a revision occurred back in the third quarter of 2023. A much larger initial decline in GDP (reported as -0.4% at the time) was later changed to a small increase. If that happens again, the whole pseudo-recession will be revised right out of existence, and these politicians will rightfully look silly.

There’s no doubt Canada’s economy is facing tough times. Donald Trump’s tariffs, now followed by his war in the Persian Gulf, are the clear culprits behind weak exports and investment uncertainty. Whether GDP growth is slightly above zero, or slightly below, is irrelevant. The critical priority is to boost spending, investment, and job-creation in all sectors (including public services) fast enough to offset that shock and enhance Canada’s economic independence.

Theatrics over whether an arbitrary line has been crossed are an unhelpful distraction from that task.

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CBC Sunday Morning Feature Interview: Trump’s War and the Macroeconomic Outlook

Jim Stanford — Tue, 28 Apr 2026 18:44:37 +0000

U.S. President Donald Trump’s war against Iran has unleashed a cavalcade of global economic disruptions. Most severe is the impact of the blockage of shipping through the Straits of Hormuz on worldwide oil prices, and supply chains for other commodities (including natural gas, fertilizer, and chemicals). Even though Canada produces far more oil. Gas, and fertilizer than we use, the resulting price spike has hit us, too – as a result of our policy choice to tie domestic prices (even for our own energy) to that global roller-coaster.

In this CBC national radio interview with host Piya Chattopadhyay, Centre for Future Work Director Jim Stanford discusses the impacts of the war (on top of the disruptions from Trump’s tariff policies) on Canada’s economy, in the lead-up to the federal government’s spring fiscal update.

What the government's policy playbook might mean for your pocketbook.

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Speculation and Greed Explain the Price of Gasoline, not Supply and Demand

Jim Stanford — Thu, 23 Apr 2026 17:20:23 +0000

The economic impacts of the U.S.-Israeli war on Iran were felt by Canadians within hours of its launch. Prices for gasoline, diesel, and home heating oil (widely used in Atlantic Canada) shot up very quickly. This is both surprising and infuriating—since those products were produced, refined, and delivered long before the war started. Why do consumers have to pay more, given the war had no impact on the cost of production?

Centre for Future Work director Jim Stanford pursued this question in a commentary originally published in the Toronto Star.

Policy Choices, not Market Forces, Explain Why We’re Getting Soaked at the Pump… Again

By Jim Stanford

For beleaguered consumers, it’s déjà vu all over again. War breaks out on the other side of the world. Within 24 hours, gasoline prices take off – rising up to 50 cents a litre on average across Canada since the war started. Natural gas and heating oil prices will follow, along with costs for anything that uses petroleum intensively (like transportation services, food, and construction).

It’ll get worse when the Bank of Canada jumps into the fray with higher interest rates to counteract renewed inflation. Then the victims of oil-fired inflation will be punished again.

We’ve seen this movie before. Sadly, we haven’t learned its lessons.

In February 2022, Russia invaded Ukraine – a country that does not produce significant amounts of oil. World oil prices soared 65% in weeks, propelled unduly by speculative bets placed on financialized futures markets.

Prices subsided by the end of the year, after it became clear world oil supply was unaffected by that war (which still drags on). But the damage was done. The 2022 oil spike was the biggest single cause of the resulting inflation that caused such turmoil around the world.

In Canada, that surge in oil prices directly accounted for 43% of post-pandemic inflation, which peaked at 8% four months later. The indirect costs were even bigger: including price hikes on energy-intensive products, subsequent higher interest rates, and job losses as high rates chilled the aggregate economy. I have estimated that the cumulative toll for Canadian consumers from the 2022 oil price surge exceeded $200 billion over three years – a staggering $12,000 per household.

Now prices are soaring again, following U.S.-Israeli attacks and Iranian counter-attacks. Before banging their heads against the nearest brick wall over the prospect of a painful sequel, consumers should pause to ask two fundamental questions. Why must we pay so much more for oil and gas produced, processed, and consumed right here in Canada, with no connection to the Middle East whatsoever? And who benefits from this outcome?

The gasoline stored in pumps right now sells for much more than before the war started. But it was refined weeks ago, from oil extracted months ago. Canada produces far more oil than it consumes; three-quarters of our production is exported. Of the modest volumes imported into eastern Canada, almost none comes through the Persian Gulf.

So there’s no energy ‘supply shock’ in Canada. The cost of producing and refining gasoline hasn’t changed at all. Yet Canadian consumers are already being soaked. And the worst is yet to come.

Petroleum companies profit immensely from this gap between soaring revenues and steady costs. That produced historic petroleum profits after the Ukraine invasion – almost $1 trillion worldwide in 2022 alone. In Canada, after-tax petroleum profits (upstream and downstream) totaled $154 billion from 2022 through 2024, when the inflationary burst finally subsided. That propelled after-tax corporate profits to 21% of Canadian GDP in 2022 (the highest share in history), even as Canadians struggled with affordability.

This new war has roiled real oil supplies (not just futures markets), so the price shock will likely be worse and longer lasting. But it’s not inevitable that we should tolerate the resulting economy-wide inflation and higher interest rates here at home.

Regulation could curtail the speed and extent to which foreign shocks are reflected in domestic prices. Energy prices could be tied to the actual cost of production (like we already do with electricity). And accelerating the transition to hydro, wind, solar, and geothermal (none of which traverse the Straits of Hormuz!) would further protect us.

Of course, petroleum lobbyists complain that insulating Canadian oil prices from global chaos will cause price ‘distortions’. But it’s hard to imagine anything more distortionary than inflicting another pointless cycle of inflation followed by contraction on an entire national economy – one that is blessed with far more energy than it needs.

The oil industry’s preferred solution to everything – build more export pipelines – would clearly make affordability even worse. New LNG projects, in particular, will amplify upward pressure on domestic gas prices, something the Alberta government’s recent provincial budget explicitly celebrated.

Perhaps Canada can’t do much about interminable conflict in the Middle East. But we can certainly do more to protect our own economy from its fallout.

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How do Banks Make so Much Money, Anyway?

Jim Stanford — Thu, 11 Dec 2025 06:41:17 +0000

CBC journalist Andrew Chang is known for his unique ability to break down complex topics, for his ‘About That’ program. He has recently posted an outstanding segment on how Canada’s big banks make so much money. Centre for Future Work Director Jim Stanford was one of the experts interviewed for the show.

The segment explains that a widening gap between the interest rates bank pay on money deposited in banks, and the interest they charge for mortgages and other loans, was a big driver of record profits. This year, however, an even bigger factor was income on investment banking, wealth management, and other financialized activities – in essence, capturing some of the cream from the current AI stock bubble.

One nuance that is hard to explain in a short segment is that the banks’ “net interest margin” is not solely the difference between what banks pay on Canadians’ savings accounts (currently almost nothing), and what they charge for loans. In Canada’s endogenous credit monetary system, banks don’t actually need your savings to lend out in the first place.

Issuing new loans comes first, with new credit money created by a simple computer entry. Personal deposits are handy for the banks (and cheaper for them than other forms of liquidity, like borrowing on wholesale credit markets), but not necessary. As new credit is spent, it flows through the banking system, creating deposits in all banks. Banks can easily settle overnight cash balances with other banks, or when needed by borrowing from the Bank of Canada.

Banks literally have a license to create money out of thin air. No wonder they’re profitable! It’s generally beneficial for an economy to have strong, stable banks, and that’s why some calls to break up bank into smaller, more scrappy competitors may not actually be sensible (those small, scrappy banks are more likely to engage in riskier activity, and more likely to face instability in the event of an economic downturn). Credit unions are a good, democratic alternative to commercial banks for personal and small business banking. And private banks should be more accountable for how they use their unique (and profitable) power: including through better regulations on fees and access to credit, requirements to fund domestic investments (including affordable housing or environmental projects) …and they should certainly pay higher taxes on their profits.

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