Bank of Canada governor Tiff Macklem says more interest rate hikes are necessary to bring inflation down: He’s Right, Consumer Price Inflation is DEFLATIONARY to the economy – October 6, 2022,
In quite a few posts, I wrote extensively that I thought there was a POSSIBILITY that the Bank of Canada made the mistake of going with negative interest rates; I’m glad to see that, at least temporarily, I was wrong. When I wrote about negative interest rates, I referred to rampant inflation, potentially turning into hyperinflation if the Bank of Canada made the mistake of going negative.
One of the reasons I wrote about negative interest rates coming to Canada was the DEBT piling up; in my mind, I was thinking no way in hell will Tiff Macklem raise interest rates based on how dovish he’s been towards Justin Trudeau’s stupid economic policies. Conservative Party of Canada leader Pierre Poilievre was right to call out Tiff Macklem for borrowing just enough money to pay for Justin Trudeau’s reckless spending sprees, where I disagree with Pierre Poilievre is his claim that consumer price inflation is the result of Bank of Canada.
More rate hikes needed despite signs of economic slowdown: Macklem | TheHill
DEMOCRACY, namely CANADIAN Democracy, is responsible for consumer price inflation, not Tiff Macklem. It’s impossible for any central banker to be APOLITICAL; we have a central bank for the specific purpose of making politicians look COMPETENT when they’re not. I’ve written many posts about Stephen Poloz, appointed by Stephen Harper, and how Stephen Poloz UNNECESSARILY drove down interest rates for the BENEFIT of Stephen Harper.
Voters want something for NOTHING, a lot of Canadians want BIG GOVERNMENT, and they don’t want to have to pay for it, well the beauty of the MODERN MONETARY system is FOREX markets allow developed countries like Canada to get a lot of SOMETHINGS for nothing. I remember renting an apartment that included in the apartment, finished floors, a toilet, a refrigerator, electricity, maintenance when things went wrong, water, heating, and alarm system in case my unit was on fire and even RENT CONTROLS.
That’s a whole lot of something for NOTHING; I want you also to understand that people on WELFARE who contribute NOTHING to Canada also benefit from all of this government; the problem is so pervasive that Canadians, including “Conservatives” feel ENTITLED to all this BIG GOVERNMENT. The current leader of the Conservative Party of Canada is will DEFEND supply management, which is a communist entity that drives up the prices of certain monopolized Canadian foods.
So when Tiff Macklem feels the need to raise interest rates, one has to ask the reason why? As I’ve pointed out in several posts, consumer price inflation is DELFATIONARY to the economy. This is hard for most people to grasp because when they imagine inflation, they imagine ALL PRICES going up, so if all prices are going p, why is the economy DEFLATING?
The answer is simple, not all prices are going up, some prices are coming down, but the price that’s not coming down is the PRICE to produce. Via the democratic process, Canadians elected a federal Liberal Government that declared war on fossil fuels; now, I don’t care if you hate fossil fuels; the bottom line is fossil fuels are directly responsible for maintaining the BIG GOVERNMENT I wrote about in a previous paragraph.
Without fossil fuels, or a viable READY TO GO alternative to fossil fuels, our standard of living has to come down, and in order to ENCOURAGE investment and prevent DEFLATION, the Bank of Canada has to REWARD savers for allowing the government to engage in reckless spending. Now you might argue, why can’t the Bank of Canada simply leave interest rates at zero? Well, if the Bnk of Canada does this and the Federal government keeps TAXING AND REGULATING PRODUCTIVITY with it’s carbon taxes and regulations on fossil fuel producers, the Federal government won’t be able to find any TAX REVENUE to finance itself.
The point of a central bank is NOT to give into all the demands of the Federal Government; the central bank’s job is to prevent DEFLATION.
Bank of Canada’s hawkish message bolsters case for another large rate hike
The great depression was a DEFLATIONARY event; people tend to forget that. Investments dried up; why did investments dry up? First of all, the interest rates had dropped to zero. Secondly, the world during the great depression was engaging in a whole lot of SOCIALISM. Whether you were talking Communism, Democratic Socialism, or National Socialism, the anti-free-market sentiments were there, and the JOB creators who were experiencing TERRORIST attacks from labor unions and other left-wing groups stopped HIRING!
The global economy seized up; in Germany, their government tried to HIDE deflation by printing money, which led to hyperinflation in the U.S banks stopped lending; why? Because during a deflationary period, more and more people are INCAPABLE of paying back or SERVICING a loan, especially a loan that wouldn’t be backed by government insurance.
The government shouldn’t be involved in economic affairs in the manner it’s involved today, and that’s NOT the fault of the central banks; that’s the fault of DEMOCRACY. Political democracy allows, as an example, people on WELFARE the ability to vote for the next Prime Minister. As you’re reading this, I want you to understand that I DO NOT believe in pensions, nor do I believe in social security; I imagine all of these schemes as forms of WELFARE.
People on welfare are OBVIOUSLY going to vote to, at the very least, MAINTAIN the welfare state, and this is the exact reason why Justin Trudeau is the Prime minister of Canada. The MILLIONS of people who voted for Justin Trudeau did so, IMAGINING that not only would Justin Trudeau maintain the welfare state, they envisioned he would GROW the Welfare State.
There is NO penalty for these Justin Trudeau supporters to think or vote in the manner they do; they’re in their right to imagine that Canada has unlimited wealth; however, it’s the job of Tiff Macklem to prevent DEFLATION because if the ECONOMY begins to deflate because it’s cost more money to buy fewer things and there are SHORTAGES of things appearing, the ILLUSION of unlimited wealth is GONE!
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Once the illusion of unlimited wealth disappears, there’s no telling what will happen., and by that, I mean, businesses might start CLOSING THEIR DOORS because they can’t afford the COST of doing business. So, what Tiff Macklem is actually trying to tell Justin Trudeau is that his debts are coming due and he’d better start paying for them with TAXATION; otherwise, he’s going to have to SHRINK the size of his government.
Where many will blame central banks, I write about AUSTERITY MEASURES. When consumer price inflation runs rampant, it’s a clear sign the government is too big. However, consumer price inflation doesn’t guarantee the government will shrink, in fact, you see in countries like Argentina that when consumer price inflation is running rampant, some people see that as a sign to make the government even LARGER, to stop those “evil capitalists.”
Let’s slap PRICE CONTROLS and more government regulations on these greedy capitalists, the Democratic mob will shout, ofcourse the democratic mob ignores all the PRIOR government entitlements that led to consumer price inflation that they now feel ENTITLED to. Instead, the Democratic mob is looking for the new ENEMY to blame for a problem the DEMOCRACY created.
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For some politicians the like to point to the central banks as the only villain, I point at you and ME as the villains; we’re responsible for this madness; for the life of me, I don’t know how to convince people to ABANDON the welfare state, I’m not sure what words to use, what arguments to make? I’m obviously not perfect, so I make incorrect forecasts, also.
So the only way I know how to fix these problems is DEMOCRATIC reform, which is one of the main reasons I write these posts because those that came before me got me to where I am today, so I hope people in the future can read this and take the baton to an understanding I can not articulate. I don’t know what Tiff Macklem will do or when he’ll do it, but unless Canadians don’t want to see their standard of living drop, they are wise to stay on board with these rate hikes at least for the duration of Justin Trudeau’s term as Prime Minister.
Bank of Canada says it cannot yet relax pace of rate hikes
Interesting times ahead!