Deflation and servicing government can’t be cured with near 0% Interest Rates: Bank of Canada could keep interest rates super low for next 4 years – September 4, 2020,
Government workers don’t work for free, government workers do not work for free, allow me to repeat myself every single government worker you see or read about does not work for free and the government of Canada only gets revenue from the taxpayers.
Now, sure the Bank of Canada can print money to pay our governments bills and sure the forex markets can prop up the Canadian dollar to make it cheaper for Canadian consumers to purchase foreign goods, but all of the things mentioned in this paragraph lead to DEFLATION of the domestic Canadian economy.
If the Canadian government has to borrow money from the central bank to stimulate growth, eventually there begets the problem of servicing that debt. Debt servicing revolves around the expectation of a particular amount of taxes being collected. Well, Covid-19 has left a bunch of people unemployed, meaning they’ve been unproductive in the Canadian economy and for the most part only been consumers.
There’s this assumption that the money sent to Canadians in the form of CERB doesn’t have to be accounted for, but it will because one of the reasons governments all over the world avoided Universal Basic Income is because the history of governments paying people not work has worked out so well for said society.
What I’m reading a lot in Canadian media is this belief that Canada has special drawing rights, I’ve been saying it for years, Canada is not the United States, Britain, China, or Japan. We have to practice fiscal responsibility and the main problem with growing debts are the cashflow of the people as the Canadian dollar is debased.
Keeping interest rates low in the face of deflation is going to be a serious problem for the government. Printing money in the face of deflation, while record numbers of people aren’t working is a blatant debasement of the Canadian dollar.
Anyway, I’ve given my warning countless times, if you can’t see the truth starring you in the face, that’s your problem, not mine!
Interesting times ahead!
