Carbon Taxes and Higher Gas Prices: Why Joe Biden and Justin Trudeau have a coming Inflation Crisis, Gas prices continue to soar, hurting businesses – October 21, 2021,
Money, which includes Fiat money is supposed to be tied to Labour when it’s no longer tied to labour because the central banks are buying assets and artificially suppressing the interest rates, asset prices begin rising which gives society a wealth effect, but also robs the working class of their purchasing power.
Now, for people in high finance and government types, this problem of the poor getting poorer goes unnoticed, because inflation in prices actually brings in more tax revenue, which makes Prime Minister Justin Trudeau and President Joe Biden appear smarter, what goes unnoticed during this price inflation periods are the businesses who are forced to change how they do business.
If these businesses have the ability to raise prices they will and if they can’t raise prices, they’ll either shrink their work for or go out of business, often overlooked when the central banks manipulate interest rates and governments spends, regulates, and taxes are the prices in commercial real estate. When the government is making policies to avoid economic collapse, while at the same time trying to pursue a progressive agenda, it creates a new floor a new minimum cost for businesses to adhere to.
This new bottom forces the cost of business to go up, which forces prices to go up, when prices go up, the revenue in taxes the government thought it was getting, now buys fewer things in the marketplace. This inflation in prices has nothing to do with the marketplace and everything to do with government policy.
But economics is a borrowing subject for most people, so when a politician says “the rich should pay their fair share” of course people who don’t understand the problem completely ignore the entity creating the problem and this is usually what accelerates price inflation because it wouldn’t surprise me in the least if the Canadian and U.S governments didn’t make the problem worse by adding more regulations and potentially hiking taxes.
When the government does this, this will cause inflation to worsen, which obviously hits the poor and could potentially make it more favorable for low-wage earners NOT to work. Because if let’s say you moved went into debt to buy a house in the suburbs and your commute to work is now much longer than it was before and your gas and electric bill is a lot higher now than it was just a few years ago? The end result is a deflationary economy.
Now, when most academics hear the words deflation, they imagine lower prices, but I like to point out the differences between ECONOMIC deflation and price deflation. Because we’re on a rule by decree money system, our fiat money isn’t a reflection of the real economy, when the U.S dollar was backed by Gold, the Federal Reserve couldn’t print Gold to pay for mounting government debts.
In fact, the 32nd U.S. President Franklin D. Roosevelt(FDR) had to make Gold illegal to debase the U.S money supply. In the modern era, the Government need not worry about confiscating Gold to debase the money supply, the Government and the Fed, merely go to a computer and change digits on a ledger.
But a private business doesn’t have that same luxury and making matters worse when the Canadian and U.S governments hide economic deflation with price inflation, it gives Justin Trudeau and Joe Biden the illusion of having the situation under control. After all, businesses getting hurt by this madness don’t have the bully pulpit in fact if you’re a business and you use the wrong words to the media, you might get blamed for everything.
So this ultimately leads to shortages, this is what happened in Venezuela, what a lot of people forget was what happened in Venezuela before their currency went to the toilet, Venezuela became very dependent on IMPORTS because of its politics, which included nationalization and over-regulation of its private sector.
Before Nicolás Maduro there was Hugo Chávez, he was for growing the size of government and demonizing the private sector, now, there’s an assumption by many that when the government regulates the private sector that greed will keep the private sector from continuing normal operations, but that’s not what usually happens when the private sector is disincentivized from being productive, it will change its behavior, it may even cease operations altogether and then all of the things people took for granted disappear from store shelves, but because the wealth effect of printing fiat money, made people imagine that the government had everything under control, shortages, become more common while people still have the money to purchase stuff.
Then one day, confidence in the fiat currency disappears! Once this confidence disappears, interest rates could spike, however they could also go negative if the people in power misinterpret what’s happening. Furthermore, it’s unlikely the Modern Monetary Theory(MMT), can’t solve shortages!
Interesting times ahead