Bank of Canada Governor Tiff Macklem Clearly Doesn’t Understand The Carbon Tax REGULATION: Tiff Macklem claims Carbon tax boosts inflation rate by nearly half-a-point – March 15, 2022,
First and foremost, I don’t expect Central Bank governors to understand the effects government regulations have the on market, but because Bank of Canada Governor Tiff Macklem took a stab at it, it showed his ignorance on the topic. First and foremost, the main reason inflation is running rampant, revolves around the LACK OF SUPPLY of oil in the North American marketplace. Why is there a lack of supply of oil in Western nations? The answer lies in the newly created oil regulations on the economy created by the government.
Not, only is there a carbon tax, productive industries are being punished for consuming energy, in fact, one could argue if the carbon tax went away not only would prices drop, they’d probably drop rapidly in the futures markets. Once you comprehend that the lack of supply is the problem, you start to comprehend how ignorant Bank of Canada Governor Tiff Macklem sounds
I like to point out that the Bank of Canada is not responsible for the distribution of Canadian dollars, typically the private banks and the various levels of government distribute money to Canadians, and it’s for this reason that you can’t expect central bankers to understand what’s happening in the economy. Now, the mistake a lot of Conservative politicians make is claiming that the central bank is engaging in money printing, and this money printing is creating inflation, but that’s not what the central bank does, the central bank purchases assets that allow it to expand its balance sheet and keep interest rates artificially low.
But when governments and private retail banks expand the money supply, they do so via DEBT, in the real economy most of the money is BORROWED into existence, meaning that the central bank is actually fighting deflationary forces. If debt servicing stalls, that’s when the central bank has a problem, and what causes debt servicing to stall? Consumer price inflation!
Private banks are profit-driven, meaning most private banks don’t lend money without the expectation of some sort of return on investment. So far Canadians have done a great job servicing their debts, why I see a recession coming is because Canadians servicing their debts while consumer prices are rising equates to more money being spent purchasing fewer goods and services.
If you don’t understand what that means, it equates to potentially fewer dollars being spent on leisure activities, which could quickly equate to bankruptcies and job losses. Because of Canada’s increased dependence on imports and Canada moving closer towards a service sector economy there are certain prices that can’t be price-controlled. Oil as an example can’t be price-controlled in Canada, because Federal government regulations are geared towards ending fossil fuels, so if these laws continue, more money will be spent on not only IMPORTING oil but producing oil in Canada.
Oil is only one industry, the other fossil fuel industries are also being hit and these increased costs in energy generation guarantees wages won’t keep pace with consumer prices.
Interesting times ahead!