Stimulus Program

You've probably seen an email that goes something like this:

It's a slow day in a small town, and the streets are deserted. Times are tough, everybody is in debt, and everybody is living on credit. A tourist visiting the area drives through town, stops at the motel, and lays a $100 bill on the desk saying he wants to inspect the rooms before deciding if he'll stay for the night.

As soon as he leaves, the motel owner grabs the bill and runs next door to pay his debt to the butcher.

The butcher takes the $100 bill and goes down the street to retire his debt to the pig farmer.

The pig farmer takes the $100 and crosses the street to retire his debt with his supplier, the feed store.

The guy at the feed store takes the $100 and pays his debt to the local prostitute, who has also been facing hard times and has had to offer her services on credit.

The prostitute rushes to the motel and pays off her room bill with the motel owner.

The hotel owner then places the $100 bill back on the counter just as the traveler comes down the stairs, states that the rooms are not satisfactory, picks up the $100 bill, and leaves.

No one produced anything. No one earned anything. However, the whole town is out of debt and now looks to the future with a sense of optimism.

And that, ladies and gentlemen, is how a stimulus program works.

The point, apparently, is to ridicule government efforts to counter the effects of the global credit crisis that was precipitated by the failure of several large financial institutions.

The email economists fail to grasp that this story is a pretty good analogy of how the financial system actually works. They are under the mistaken impression that money has a concrete existence, presumably in coins and paper currency. Fact is, money exists mostly in electronic form on computers. Before computers, it existed on paper ledgers. Think about where most of your own "money" is.

Contrary to what's asserted near the end of the email, the problem isn't that the townspeople hadn't been working. Goods and services had been produced. The problem is, without money to pay for them, the townspeople have to stop working.

And money is created by lending, which is what the tourist, in effect, did when he left the $100 on the motel counter. That's why when a couple of big financial institutions failed a few years ago and other banks, fearful of not being repaid, refused to lend, the global financial system was in danger of seizing up. Without lending, money literally disappeared, businesses failed, and millions lost their jobs and homes. Governments, as the lenders of last resort, had to step in to save the system from complete collapse.

Banks, in fact, are permitted to create money by lending what they actually have on deposit many times over (about 15-20 times). The fact that these reserves of "real" money were too low in many cases was a contributor to the financial crisis, and efforts to prevent a repeat have focused on requiring banks to increase the ratio of deposits to loans.

So, if you'd like to stimulate the economy (and help yourself at the same time), here's an idea. That jar of change (mostly pennies) you have somewhere in the house? It's dead money, a bunch of metal disks -- unless you take it to the bank and deposit it. If all 35 million Canadians deposited the $2 in loose change from beneath their sofa cushions, banks could create over a billion (yes, with a "b") dollars of new money in the form of loans to stimulate the economy.

Pass it on.

Be Afraid

Be afraid, boys and girls. Be very afraid.

There's a very bad man out there and he's trying to hurt you. He wants to call you names, give you a wedgie, and steal your lunch money.

His name is Iggy, and he's the snaggle-toothed brother of Emmanuel Goldstein and first cousin to the devil himself.

I know, because our Dear Leader, Stephen Harper, and the Ministry of Truth have taken to the airwaves to warn us.

The dastardly Iggy wants to (gasp) form a coalition.

No, no, not a good coalition like the one between the Reform Party and the Progressive Conservative Party.

A wicked, evil, un-Canadian coalition like the ones in Great Britain, Australia, New Zealand and all those other funny, foreign countries. You know, the kind of treasonous coalition where different parties in Parliament conspire together to represent the 65% of Canadians who voted for them.

But coalition-forming isn't the end of Iggy's diabolical plotting. He's also refusing to borrow money so big corporations can have the tax breaks they deserve. But if big business doesn't get lower taxes, how can they afford to pay their CEO's the millions they're entitled to? Or create the jobs they promise with every tax cut, but never seem to deliver because the tax cuts are never large enough?

It gets worse. Iggy wants the government to listen to police chiefs and enforce the law that requires owners of long guns to register them. Are we supposed to treat guns like cars? What is he, some kind of cop-loving, law and order nut?

What other sick, twisted plans does Iggy have up his sleeve? Balanced budgets and pharmacare? Pension reform and an accurate census? Clean air and medicare? Has the man no shame?

But sleep soundly, boys and girls, for our Dear Leader is hard at work, ever vigilant, poised to foil Iggy's evil schemes. Just vote for him and you need never fear any of them will come to pass.

Getting My Groove Back

Some of you have remarked that I didn't maintain my usual blogging pace during the month of December. Perhaps you thought that, full of the good cheer of the season, I was inclined to go easy on the usual suspects. And while I won't deny that I freely partook of cheer over the holidays, there was a darker reason for my silence.

I have to admit that I was temporarily thrown off my game.

In my last post before Christmas, I confessed how I couldn't possibly make up anything more outrageous than Don Cherry's histrionics at Rob Ford's coronation or Bill Blair's gyrations over his involvement in the G20 civil rights abuses.

And then came the video images of Stephen Harper rocking out at the Tory caucus Christmas party. Crooning John Lennon's Imagine. Thumping out the Guess Who's Share the Land at the piano. Belting out the Stones' Jumpin' Jack Flash.

I was rendered speechless (and blogless).

For weeks afterward, I'd awake in a cold sweat. I couldn't shake the images: Tony Clement and Bev Oda getting their funk on, John Baird after a couple of ryes, Peter McKay lurking under the mistletoe.

I suspect I had a case of PTSD: Post Tory Seasonal Distemper.

But time, as they say, heals all wounds, and I have Rob Ford of all people to thank for taking my mind off these ghosts of Christmas just past.

Because this week I found myself pondering the meaning of gravy. Gravy, as in the trainloads Rob Ford claimed was in the Toronto city budget. It is, I suspect, one of those right-wing code words. Like Marie Antoinette's cake, gravy is what most people depend on for a decent life for themselves and their families. Gravy is libraries and swimming pools and social services and public housing and skating rinks and transit and after school programs and community centres. If you're a bus driver, garbage collector, or daycare worker, gravy is a living wage.

And that got me pondering the strange mental processes of Rob Ford and his allies. Fer instance: as a cure for traffic congestion on Toronto's streets, Ford eliminated the vehicle registration tax and proposed a transit fare hike and the cutting of bus routes. Seems all those cars aren't the problem, it's the buses, streetcars, and subway trains clogging the roads.

And then, only twenty-four hours later, even as I write this, it seems some magical gravy has been found and the fare increase has been called off.

Bait and switch? Cold feet? Confusion in the ranks? A sinister conspiracy?

It's good to be back to normal. In fact it's a gas.

Winter 2011 Points and Miles Offers

If you've been thinking about a weekend winter getaway, most of the hotel chains have recently announced their first quarter promotions.

Hilton HHonors is offering double the usual 10 points per $1 spent on a two-night stay, triple on a three-night, and quadruple for a four-night. The offer is good for stays up until March 31. Registration is required via this link.

Hilton HHonors is unique among hotel loyalty programs in that it features "double-dipping". With HHonors, you always earn both HHonors points as well as miles in the airline program of your choice. And Delta SkyMiles is simultaneously offering 1,000 SkyMiles for a one-night stay, 1,500 for a two-night, and 2,000 for a three-night. Separate registration is required for this offer via this link.

So for a two night stay at a Hilton property (Hilton, DoubleTree, Embassy Suites) costing $125 per night, you would earn 5,000 HHonors points and 1,500 Delta SkyMiles. Fewer points are offered for stays at Hampton Inn and Homewood Suites.

Membership in both the HHonors and SkyMiles programs are required, of course, but enrollment is fast and simple. You can join HHonors from either of the links above while registering for the offers. Here's a link to join SkyMiles.

Starwood Hotels (Sheraton, Westin, etc.) have an offer for Starwood Preferred Guest members. Until April 15, all stays earn double SPG points. That means 4 points per $1 spent. Thursday, Friday, Saturday, and Sunday nights earn an additional 500 bonus points per night.

A two weekend-night stay at $125 per night earns 1,000 base points plus 1,000 bonus points. Free nights at Starwood hotels begin at 2,000 points, though most are in the 4,000-10,000 points per night range. Join Starwood Preferred Guest via this link.

Country Inns and Suites by Carlson does not have a lot of properties in Canada but is more widespread in the U.S. and offers free breakfast and wireless internet. It caters mainly to business travelers and tends to have locations in suburban business parks near the Interstate. Its loyalty program is called goldpoints plus. Until February 17, it's offering 10,000 bonus points for a one-night stay during the "Country Means Business" promotion. Register (and enrol in goldpoints plus) via this link. Read the terms and conditions carefully.

Radisson Hotels are also part of the Carlson chain. Stays at Radisson earn 20 points per $1, at Country Inns and Suites, 15. Booking online earns 1,000 bonus points. Free stays start at 15,000 points. You can book stays with a combination of points and cash.

Marriott is one of the world's largest chains, but is underrepresented in Canada. And I find its properties to be generally more expensive than the competition. But between February 1 and April 30 Marriott is rolling out its Megabonus promotion. Stay twice and earn a free night. Register (and enrol, if you're not a member) via this link.

No word yet from Hyatt and IHG (Holiday Inn), but if they announce anything good, I'll let you know.