The Canada Emergency Response Benefit (CERB) has led to rumors of a universal basic income (UBI), a Green Recovery Is Economic Suicide – September 16, 2020,
The first thing I’d like to write is that I’m not against a Universal basic income, my main problem with the Universal Basic Income is physical cheques being mailed out. If let’s say Universal Basic Income meant that the government couldn’t tax Canadians on the first $500 per week, I’d be all for the Universal Basic Income.
My problem with the Universal Basic Income is how it’s being pushed, whereby the government sends Canadians a cheque for being unproductive. I’ve often written about getting rid of welfare for able-bodied people who refuse to do low skilled labor.
I’m also not against Government housing, as long as the recipients of said Government housing cooperatively do their part in maintaining the government building. A lot of the current welfare Canada has in place were well-intentioned, the problem was that once these welfare programs became the norm, there was a demand for more welfare in which the recipient of such welfare had no cost, responsibilities, or liabilities.
With that established, I worry for my countries economy when the inexperienced finance minister who we all know is being propped up to replace Justin Trudeau says ‘Fighting pandemic is government’s top economic priority’.
Now I could understand if she simply said it was the countries top priority, but she said the following
“The single most important economic policy of our government and the best thing we can do for our economy is to keep coronavirus under control,” she went on to say. “If we continue to do the right things on the health front that is the strongest foundation and support we can give to our economy.”
Sweden as an example has shown the world what an out of control coronavirus can do, I’d like to remind Canadians that the U.K as an example used their existing welfare programs to carry them through the pandemic. Although Canada has a reserve currency the IMF doesn’t view nor hoard the Canadian dollar the way it hoards the US dollar or the British Pounds.
So, although Canada took a similar FINANCIAL approach as the U.S in handling the pandemic, by giving away money, the consequences to the value of our dollar are far different than the British Pound or the U.S greenback.
I say this because the topic of a Universal Basic Income is, being brought up over and over again. I personally don’t blame Canadians with limit financial education, for assuming that because The Canada Emergency Response Benefit (CERB) has appeared to leave Canada unscathed, that this won’t be a problem down the road.
I brought up the U.K’s Conservative handling of the Coronavirus, because free money for all, doesn’t exist everywhere. In many parts of the EU, there were no cash giveaways, and although the markets haven’t punished the countries who gave away free money yet, that day of reckoning will be arriving soon.
The U.K debt now larger than the size of the whole economy, however, what Canadians forget is that Canada’s debt burden is $3.2 trillion. That’s 166 percent of GDP!
Jack M. Mintz: Canada’s debt load is even worse than you think | financialpost.com
Add it all up and Canada’s debt burden is $3.2 trillion. That’s 166 per cent of GDP — fully four times the IMF forecast for 2020
As the article above points out
national accounting (unlike the public accounting used in federal and provincial budgets) does not include government employee pension plan liabilities — the money we will all owe to retired civil servants that isn’t covered by a corresponding asset.
Jack M. Mintz: Canada’s debt load is even worse than you think | financialpost.com
This is part of the reason why I often write that Austerity measures at some point will become an inevitability in Canada. I’ve written about Canada Posts’ pension plan as an example for years. Although Canada Post is a Crown Corporation(a state-run enterprise), their pension plan mirrors many of the pension plans in Canada’s various public sectors.
Paying people to be unproductive with non-market-based money is a pyramid scheme and it’s dependent on Private Sector job growth. Now, the way UBI is being presented to Canadians is that it will mirror CERB and the point many of us are trying to make is that the Private Sector in Canada is already shrinking.
Not only is the private sector in Canada shrinking the barrier to enter into the Canada’s Private sector is getting more and more expensive. The cost to start a business in Canada is going up and a New Green revolution is nothing more than a government regulation that will push the cost to start a business even higher.
Now, what should really be frightening to Canadians is that with all the free government cash giveaways and the mortgage deferrals, the missed rental payments, Canada’s inflation rate in August was 0.1%. Now, I’d like to remind the reader that CERB collectively gave Canadians more money than they would have made, had they been allowed to work.
Canada’s inflation rate was 0.1% in August even as gas and plane ticket prices plummeted | CBC
Really let that sink in for a moment, not individually, but collectively CERB gave Canadians more money than they would have gotten had they been forced to work, from what I understand CERB will be taxable, I’m not going to comment on that because I’m not entirely sure how that works.
So I say this because what a lot of people and so-called experts don’t understand about DEBT is that it’s deflationary. Consumers don’t like to be in debt, debt was supposed to be reserved for business people because the whole purpose of debt is to grow the value of your assets.
A house is not an asset if it’s not putting money in your pockets. I often write that the Canada Mortgage and Housing Corporation (CMHC) is at least partially responsible for inflated home prices. What this means is that the government can play a role in propping up asset prices, but what a government can’t do is change the cash flow statement.
The cash flow statement is market-based, what the market is willing to pay for a good or service is what the market is willing to pay. As an example I used to love Wendy’s burgers, that is until minimum wages in Ontario were raised and the price Wendys charged for my favorite burgers was also raised.
So I simply stopped going to Wendys, because I can buy 16 beef patties at Costco for under $20 and make the 16 burgers for less than $40 total whereas it would cost me about $15 for 1 burger at Wendy’s. This is how low wage-earners lose their jobs and their purchasing power.
Truth be told had the cost to pay for government in Canada wasn’t so high, low-skilled Canadian workers could buy more with their money. This is why I’ve stated at the beginning of my post, I’d be all for UBI if low skilled workers didn’t have to pay ANY taxes until they made $500 per week.
What I mean by this is even the taxes they spent at point of sale purchases would be refunded to them along with the additional money they were unable to make in the market economy. I’m all for that, what I’m not for is paying able-bodied people to be unproductive.
Lastly, this green energy revolution, or green energy recovery that Leftists are hoping for, if it’s pushed through it’s deflationary, not inflationary. Currently, there exists no financial replacement for oil. So if we get rid of il and go green or if we punish people for using energies the environmentalists don’t agree with, that’s deflation which will mean fewer tax dollars collected.
I understand that people assume that the market economy has nothing to do with the governments’ ability to add value to our currency, but the Canadian dollar n the forex markets is viewed as a petro-dollar. If that’s distinction is removed and the Canadian dollar is viewed as a green-energy dollar, well the value of the Loonie has to be changed.
And changing the value of the Canadian dollar will have a serious impact on existing welfare programs. Furthermore, it could lead to a massive brain drain because there are a lot of Canadian engineers as an example, who couldn’t find high paying SUSTAINABLE jobs in a new green economy.
With all the subsidies a lot of these green energy companies, can’t pay a dividend without the government, they’re not profitable and in their totality, they’re causing more pollution than fossil fuel companies. The green revolution is so bad that even Micheal Moore had to make a more called ‘Planet of the Humans’ which exposed the green revolution as a scam.
I understand that the Planet of the Humans movie was something the Environmentalists would rather shovel under the rug, but that’s the current reality. The Green revolution is a giant scam, Germany a country that hates Nuclear energy is now reliant on Russian natural gas, Germany is also still using coal because it’s solar and wind green revolution hasn’t worked out as planned.
I advise Canadians to at least consider being prepared for the worst.
Farewell to the Liberals’ easy green revolution | macleans.ca
Interesting times ahead