Monetary policy and the intentions of the central

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monetary policy and the intentions of the central bank Federal Politics 1950s Coyne was appointed as the governor of the bank of Canada by the liberal government of Louis St Laurent, shortly after he took the post the government changed. the minority conservative government John Diefenbaker was elected in 1957 and a year later he was elected the majority Donald M. Fleming was finance minister in Diefenbaker’s cabinet for both the minority and majority governments Fleming had the same view about inflation as Coyne’s however, they belong to different political parties Fleming was looking for a balanced budget but the government was spending heavily on defence and as an important minister Fleming had to support such decisions PM Diefenbaker and Howard Green was blaming Coyne’s policy of rising interest rate and suggest that he should be fired The conservative parties was against the tight-money policy of the Bank of Canada, however, the Bank of Canada rejected the notion of tight-money policy instead it call the policy ‘sound money’ policy and the interest rate issue become politicized Coyne and the government
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Coyne was bluntly critical of government fiscal policy and telling audiences that the government was overspending and that the bank of Canada could not achieve economic stability on its own Coyne and the economists University economists lost confidence in the ability of bank of Canada under Coyne’s management Scott Gordon an economist at Carlton University wrote a short book the economist versus the bank of Canada which blamed Coyne’s monetary policy Edward Safarian criticized Coyne’s policy puts pressure on the economic growth which slows it down and disconcerting to business people across the country, and also unsettling for ht general public Coyne Departs In 1961 the government decide not to renew Coyne’s term in office The battle between Coyne’s pension begins, they felt 25000 pension for Coyne is too much which is more than 13750 the previous governor received Coyne denied to resign July 6 a bill declaring the office of the governor of the bank of Canada vacant was passed by the House of Commons, the liberal dominated senate invited Coyne to testify and the senate defeated the bill, exonerating Coyne. The same day Coyne resigned Louis Rasminsky After Coyne resigned, Louis Rasminsky
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