While central banks, treasury secretaries and even Canadian finance ministers are in a tizzy over deflation, they are simultaneously exhorting the public to get out there and spend and borrow, and haranguing the banks to lend more.

But with hundreds of jobs losses each day, an anemic economy and dismal markets, people are more interested in paying down debt and saving. It’s a confusing message for confusing times.

In advance of the 2009 federal budget, Canadians are hearing phrases such as stimulus package, shovel-ready projects and billions in deficit spending.

It’s a timely topic taken on by AIMS newest research fellow Harry Koza, the Senior Analyst for Canadian markets at Thomsonreuters’ IFR Markets, examines the topic. As AIMS’ Fellow in Financial Markets, Koza shows us in this Commentary how we got into this mess and why the solution to a debt problem isn’t taking on more debt.

Follow this link to the complete Commentary.

Follow this link to learn more about Harry Koza.