Once again we can see private sector and some public sector economists over estimating or historically exaggerating the risk factor in the large debts growing out of the covid-19 crisis. The Government very wisely and the Bank of Canada with their use of quantitative easing have together managed the crisis very prudently.
Contrary to the conventional wisdom derived from a bygone era the debt to GDP ratio is nowhere near historical maximums. For example the current net debt to GDP ratio is about 40 % . During the second world war the ratio rose to over 100% .During the Great Depression of the 1930s it peaked at close to 70 %. Canada and its currency survived and the country‘s economy thrived after the war under a post war Keynesian policy. It will again so long as we don’t foolishly implement austerity or budget balancing reductions. Also remember that in calculating net debt the Government typically under-estimates the value of public sector assets.
There is no sign of inflation as oil prices have slumped and there are still disinflationary tendencies. Hence the government‘s fiscal policy and the Bank of Canada‘s monetary policy are appropriate.