I have the time
feel free to explain what ever you are willing to share ... if every impacted nation (most) print and inflate their currencies at a similar rate to combat deflation and all the handouts is there a chance we all come out of this “normal” ?
The Bank of Canada sets the interest rates in the economy and that is the main way in which it controls the supply of money in the economy (and inflation/deflation as a result).
Modern banking is based on a fractional reserve system (it's capital requirement now but roughly the same thing). What this means is if you are a commercial bank... say CIBC. Someone deposits $100 and creates an account with CIBC. CIBC is required to keep $10 as a reserve (or capital requirement) and CIBC can loan out the remaining $90. This 'creates' money. Lets say you deposit $100, I apply for a loan receive $90 and deposit that, someone else applies for a loan, are given $81 and the bank keeps $9. The supply of money went from your $100 to $190 to $271.
The scenario up above is in the absence of an interest rate - so while in theory we could do this deposit-loan-deposit for an unlimited amount of money... in reality interest rates stop that. The bank will still make loans and create money but with interest rates it will make sure loans can be repaid. Some will be denied for loans. The amount of money in the economy will therefore have a limit. A growing limit but a limit. And as long as this growing limit roughly corresponds with new economic activity, everything is fine.
And like I said - traditionally the way the Bank of Canada controls commercial banks and this money supply is through interest rates. The higher the interest rate, the more reluctant I am to borrow that $90. The more reluctant the bank is to lend me $90. Can I really pay them back? Can my business idea make enough money so I don't default on the loan? The same is true in reverse - the lower the rate, the more likely I am to want to borrow and go to the bank with my idea. The easier it is for business to borrow and maintain operations and pay people and keep the economy stable.
Now what drives a bank to loan money? Interest rates, ability to repay, economic conditions, income of the person or revenue of the business, etc...
So what happens during a recession or a shutdown like we're experiencing now? People are out of work and don't have an income, business revenue falls, economic conditions are bad, a lot of people might not be able to repay a loan if it is given to them.
The Bank of Canada sees that, understands the perspective of businesses, people and banks and decides to lower interest rates to make it cheaper to borrow money. This makes it cheaper for banks to borrow between each other and to borrow from the Bank of Canada itself if banks are unable to borrow between each other. It's a "safety net" for the banks and it encourages people and businesses to borrow money from commercial banks when they might be nervous to because of economic conditions.
Now quantitative easing is when the interest rate cuts just aren't enough and are not working. Things are so bad people/businesses don't want to borrow even at rock bottom rates, banks don't want to loan because they fear things are not going to work.
So the Bank of Canada will go in and buy government bonds, then commercial bonds and other debt instruments depending on how serious the situation gets. This frees the banks up to spend that money. So you have a $100 deposit, I have a $90 loan, the central bank buys my loan freeing up that $90 again for the bank to loan. So we would have your $100, my $90 and a third person with $90 now. So the supply is $280 in theory if the bank loans it out. If you push cash into the system then banks might be more willing to take a risk. Think about it in terms of millions of loans and deposits (your $100 and my $90). The QE is attempting to stop money supply going from $190 to $150. It's trying to keep it at $190 so that people keep borrowing, repaying, buying, selling and economic activity continues as normally as possible.
Now some critics say this is printing money and it will lead to hyperinflation... but this is a real attempt to stop deflation. If no loans are going out the door to create money and loans are only being repaid which is removing money... we're going to enter a deflationary spiral. And that's really bad from a real perspective. It means businesses can't access money, it means people can't access money. If this happens - businesses can't generate sales, businesses have to fire their employees, prices for items go down (deflation) to try to sell them and generate some revenue and this cycle just continues and continues.
It's also important to think about it in real terms as well. If we accept that there's a lot more money in the system with QE - fine, I agree. But that doesn't mean much to you or me when we go shopping if all this extra money is sitting at the commercial banks and they are not loaning any of it out.
Money being actively used is what drives prices. That's another problem we faced in 2008 and will likely face again now. Does it matter much what the Bank of Canada does if the commercial banks just sit on this QE money and don't do anything with it? A bank isn't about to buy groceries or pay rent or buy a car to drive. So yes the money exists but it's unlikely to cause inflation and drive up prices for you or me.
We'll have to see. This is the first time the Bank of Canada has really engaged in large scale QE. The US engaged it in in 2008, we didn't really do much because our banking system wasn't on the verge of collapse.
In terms of hyperinflation which is usually what you see when someone talks about "printing money":
The Bank of Canada is still independent. This isn't like Zimbabwe or Venezuela where the President goes to their central bank and tells them what to do. Justin Trudeau isn't about to phone the Bank of Canada, demand they authorize the Canadian Mint to print $100 trillion and then pay public servants with that money. That's hyperinflation. Quantitative Easing by an independent central bank looking at conditions in the economy and market... and trying to prop up an economy in trouble is not hyperinflation.
Sorry if it's not well organized. I just see "the Bank of Canada printing money" and I want to point out it's not that simple and it's not going to lead to the next word that I usually see after "printing money" which is "hyperinflation". The examples in my paragraph up above is what creates hyperinflation. Where the central bank has no independence and literally prints money for the government to pay people. The government of Canada is still borrowing money that it will repay and is not telling the Bank of Canada what to do.
I'll edit one more time because I realize I didn't directly answer the question:
In a hard recession like 1929, 2008 or now - the money supply, the active money supply is going to potentially start to shrink. Anywhere experiencing a recession will be in the same situation. It doesn't matter if the US Federal Reserve is doing the same thing we are, the European Central Bank, the UK central bank... if they're all experiencing the same thing and they all do the same thing. So in theory we would come out all "normal".
At this point we're starting to talk about global supply chains and foreign exchange. And in theory the Bank of Canada has some control over this as well because it can buy US dollars, it can buy Euros. And this can have some impact on exchange rates and make imported items cheaper. But we're sort of leaving the concept of money supply and inflation/deflation and moving into investors looking for safety and the place they usually find safety is in US Dollars, US treasury bills because of the size and diversity of the American economy.
So we could see some prices go up for items we import if our dollar stays low relative to say the USD. But the Bank of Canada may not necessarily see that as a bad thing given Canada is an export nation. It may see it as a case where the lower exchange rates position us well when we come out the other side and our stuff is cheaper for Americans and others to buy.