Attempting to relabel Debasement of the Canadian dollar as Inflation, the ongoing fight to grow the size of government – September 14, 2020,
The cost of running the government continues to rise in Canada and the cost for government debases the Canadian dollar. If you’re a Canadian and you’re wondering why housing and food prices rise, while technological gadgets like phones and even televisions aren’t rising it’s primarily because the government has little control over the competitive tech sector.
Most tech gadgets are made overseas and because the tech sector is so competitive, unless there’s a REAL value added to widget like say an Apple Watch or Apple iPhone as an example, there is no way for said company to raise their prices without the threat of their competition turning them into IBM.
On the other hand, the government of Canada is heavily influential in food and housing prices. The Canada Mortgage and Housing Corporation(CMHC) and the Bank of Canada(BoC) both of these Government-owned Cron Corporations prop up housing markets and do their best to prevent housing markets from deflating.
In Canada, as Maxime Bernier points out Supple Management is a Government control national agricultural policy framework used in Canada that controls the supply of dairy, poultry, and eggs through production and import controls and pricing mechanisms.
This as well as other food-related regulations assures Canadian producers that they won’t have the competitive problems that exist in the tech sector and it also assures that Canadians will pay more for said goods even if the Canadian economy experiences deflation. There are a lot of imports that never make it to Canada because it’s not profitable to the foreign producer simply because of Canadian regulatory policy.
Lastly, another reason why the Canadian dollar is being debased is because of all the Crown Corporations and public servants, as well as private sector companies reliant on government paychecks and contracts that have no real competitive mechanism, as long as the government grants them the economic shelter. Canadian taxpayers are forced to pay an inflated price for everything Government related this is why prices go up while the economy deflates.
Coronavirus was deflationary, it was so deflationary that the Canadian government had to mailout checks and ask banks to allow mortgage deferrals. Rental housing also was told to allow their tenants to default. All of this is clearly deflationary, however, it was covered up by printing money, and government policy, and oddly enough, people who don’t understand the problem are now calling for a Universal Basic Income.
Bill Kelly: Is Canada ready for a basic income program? | globalnews.ca
Now, because Canadians haven’t actually felt the loss of their purchasing power yet, I don’t blame the financially illiterate who believe that CERB and extending EI can be made permanent. Trudeau and Trumps’ response to Coronavirus on the surface appears to have worked, correct?
Well, first of all, Canada doesn’t have the same Special drawing rights privileges as the United States or even China for that matter and deficits do matter in this country and second, let’s ignore deficits and talk about productivity.
You can’t hide a lack of productivity because it shows up in a government’s cash flow statements, which they’re reliant on to service debts. Japan is another country that has Special drawing rights and let’s not forget that Japan is an economic powerhouse, Switzerland is also known for its preferential treatment for the wealthy, which is why negative interest rates have caused minimal damages to those countries.
Canada on the other hand does not have an emperor, nor does the municipal government play a central role in our daily lives. In Canada, our democratically elected Federal government can actually destroy our economy and that’s what I suspect has happened in Canada.
Let me also point out that printing money in the face deflation causes hyper-inflation, which is basically the same thing as debasing the currency. Argentina did it, Zimbabwe did it, Venezuela did it, now, I’m sure Canada might do it slower, but the end result is the same, you can’t hide a lack of productivity, fudging the numbers can’t hide a countries uncompetitiveness.
When the smoke clears, what’s left will be felt by the Canadian consumers, and regardless of what the powers that be want to label it, it will be Canadian dollar debasement as it’s my belief that austerity measures won’t even be a topic of conversation when Canadians start to feel the financial burden of a debased currency.
Natural or real inflation comes via value-added. Apple as a company as an example can afford to raise the prices because they offer a level of value not available in other tech companies. That’s how real inflation is generated, it’s generated by more individuals having the ability to afford luxury goods and this typically happens in countries where the government is smaller and the people are more financially educated.
Financially illiterate people in a democracy tend to vote for a bigger more expensive government. The government doesn’t work for free, Government doesn’t oppose public sector unions which raise government costs, the government doesn’t oppose regulations which gives the government more money, the government doesn’t even mind making up new taxes like a carbon tax, because it gives the government more money.
Now whether the voter feels like they’re getting value for the price they spend on the government is irrelevant at some point during this transition, because the more voters who are reliant on the government for their economic survival the worse the problem will get.
once all of this money is concentrated within the government, once the debasement happens, if the people are too financially illiterate to comprehend why they’re being made poorer, the problem will continue into Infinitum. Argentinians no matter how poor they get, continue to vote for big government.
Why inflation doesn’t feel low and what you can do about it: Don Pittis | cbc.ca
Interesting times ahead!