Austerity Measures or Recession. More Signs of Economic DEFLATION coming to Canada as BoC Raises Interest Rates: Emboldened workers are pushing for higher paycheques as inflation soars – April 27, 2022,
As some people read this they might assume me to be some sort of elitist, and that’s the problem when the government intentionally keeps financial education out of the school system. But in this short article, I’m trying to illustrate, why Big Government has created a serious recessionary scenario in which ECONOMIC deflation will be fighting rising PRICES.
The world is currently on a RULE BY FIAT monetary system, which means the money supply is not a correct representation of what’s happening in the economy. If money was backed by a commodity such as Gold, first and foremost there would be SERIOUS consequences for minimum wage laws. Wage and price controls have immediate consequences under a gold standard, America had to abandon its gold standard entirely because of the minimum law.
Once the government says it’s illegal for any person to work for less than the arbitrary government wage, business people have to abandon businesses that can turn a profit under the new minimum wage law. No, big deal you argue? Well, when certain businesses disappear locally, they might reappear somewhere else in the world, especially if the gold standard is abandoned and a fiat monetary standard emerges.
Under a fiat monetary standard, the forex markets play a vital role in INTERNATIONAL trade. In the case of Canada, Canadians might find more value in the Canadian dollar outside of Canada than inside of Canada. Why is that you ask? Because Canada’s various levels of government have their own rules and regulations that must be adhered to in order for Canadians to achieve profitability.
Once you understand that Canadian governemnt rules and regulations must be adhered to before making a profit, you’ll soon realize why consumer prices rise and don’t come down, while the INTERNATIONAL purchasing power of the Canadian dollar might hold firm. Because of rising consumer prices, the Bank of Canada is being forced to raise interest rates? Now, let’s quickly unpack that, why exactly is the Bank of Canada raising interest rates to combat consumer price inflation?
Well, in a nutshell, rising DOMESTIC consumer prices are the result of bad rules and regulations in the DOMESTIC economy. An example of this is gas prices, Canada is fully capable of producing its own gas and even providing its citizens with HIGH paying jobs, but the Canadian government and a lot of Canadian citizens think that fossil fuels need to be fazed out.
So Canada’s federal government decided to create wealth redistribution schemes that punish successful fossil fuel companies. Because there is no alternative for fossil fuels which also create plastics and all sorts of products too numerous to name here, consumer prices are forced upwards. It would be one thing for only car gas prices to rise, it’s something else when the price of EVERYTHING starts to rise.
Now as consumer prices increase, it’s only natural that wage earners would also demand to be paid more, but here’s the problem, the private banks do most of the money printing and the private banks are for-profit institutions, that reward entrepreneurs who know how to grow the economy. The private banks will not lend to people with bad ideas. If private banks continuously reward people with bad ideas, those private banks will go bankrupt. The Public Bank, Canada’s central bank The Bank of Canada(BoC) on the other hand will reward governments and private citizens who have bad ideas.
Meaning that when the Federal government creates a dumb regulation on the economy, instead of the bank of Canada assessing the risk and charging the Federal government an interest rate based on their risky proposal, The BoC will instead issue the Federal government a loan with the lowest most favorable interest rate possible. Now, when this bad idea by the federal government makes its deficit even larger, the Bank of Canada will still be open to granting the Federal government more debt, without a demand that the Federal government reconsiders its prior bad ideas, which have damaged the economy.
There is no appetite for austerity measures at this moment, currently what I see are a lot of people hoping a big government will make things better. because there’s no appetite to shrink the size of the government, it’s only natural that as consumer price inflation rages on people will ask for higher wages, the problem with this is not only automating certain jobs out of existence, the problem is that some businesses may either decide not to grow(it’s happened before) or they might decide to instead close up shop(that’s also happened before).
Sometimes closures and bankruptcies are wise decisions because once people lose services they’ll be happy to see a new company emerge even if the new company has much higher prices. In certain regions in Canada, the people will gladly pay $10+ for 3 liters of milk, better to pay higher prices rather than experience shortages? right?
Prior to Justin Trudeau’s bad ideas, there were Harper’s bad ideas, Paul Martins’s bad ideas, Jean Chretieins’s bad ideas, etc. This compounding of bad ideas appearing NOT to cause inflation is why eventually these Liberals got to the killing of the goose who lays the golden eggs. Oil and gas in Canada have been the profit generator and lovers of big government are always looking for a new enemy to destroy. eventually, they found their way to slaying the Goose that lays the golden eggs, and because Canadians are used to the high life or the good times, it’s hard for a lot of Canadians to imagine a serious economic downturn that might last for DECADES.
I will not be the bearer of bad news, all I will say is that based on what I’m reading there is NO appetite for austerity measures and now that you know this, you’d be wise to look at the current situation for what it is and not what you’d like it to be!
Salary hikes replace flexibility as main reason driving people to quit their jobs, survey says
Interesting times ahead!