Central Bankers are not supposed to get involved in Democracy or Politics, But The Words of Tiff Macklem appear to Point at Justin Trudeau and Canadian Voting Patterns as the main culprits of Consumer Price Inflation – April 13, 2023,
If you subscribe to most economical schools of thought, their thinking tends to be rooted in the gold standard or a financial system in which inflation is SUPPOSED to increase, based on the data. Once you’re dealing with fiat currencies, everything changes; you’re now dealing with confidence and infrastructure.
The confidence in the Canadian dollar GLOBALLY is still quite good; however, DOMESTIC policies on productivity in Canada are HORRIBLE. Justin Trudeau and the voters that currently support his agenda have CONSUMER PRICE INFLATIONARY built into the regulations they want on the Canadian economy.
Now, in the minds of most people, they’ll say well, if consumer prices are going up, then the GOVERNMENT should increase wages and welfare payments. Easy fix, right? Wrong, there’s something called the foreign exchange markets, and the forex markets is how other countries compete with Canada. If the cost of doing business in Canada is too high, companies will leave and use the CURRENT strength of the Canadian dollar to their benefit.
Oddly enough, the Canadian government could benefit from this via tariff taxes; this is one of the reasons why governments will often sit idly by while their domestic manufacturing and production capacity shrinks.
Third-world and less-developed nations become better investment destinations for capital when the costs of doing business go up in developed countries. Although Trudeau has created a regulations nightmare for any private company in Canada that consumes energy via his Carbon Tax and other “social and climate change” agendas, the voters who support his ideals appear reluctant to pay the higher prices associated with his agenda, which leads to fewer tax dollars being collected.
Furthermore, PRIVATE industry that finances the Canadian federal government via taxes has the option to change its business model, declare bankruptcy, or leave Canada altogether, potentially taking away the Canadian jobs it created that have income taxpayers that finance Trudeau’s ever-growing Federal Government.
The Carbon Tax would Have Bankrupted Canada within a Few Weeks if there were a GOVERNMENT Gold Standard.
Everything I pointed out in the above paragraphs can only be prolonged with FIAT CURRENCIES. Prolonged consumer price inflation only exists with FIAT CURRENCIES. I will again point out that in the minds of most people, when consumer prices go up, their first instinct is for the GOVERNMENT to raise wages and welfare payments; well, currently, to the best of my knowledge, Gold is a SCARCE resource.
Meaning that if money were backed by gold, there were would constraints on what the government could do. Even if voters wanted a climate change agenda, they’d have to pay for it without deferring their tax dollars payments to a later date.
Trudeau is not paying for his climate change agenda with tax dollars, he’s running a DEFICIT, and if Canada didn’t have a central bank that issues its own currency, Justin Trudeau would have to go to the private sector DIRECTLY to borrow the money at whatever MARKET interest rate the private sector decided on.
Now, this is where some Socialists and Marxist thinkers get creative; they’ll say to themselves, well, how about we NATIONALIZE private businesses to force them into doing Justin Trudeau’s agenda because, after all, the PEOPLE voted for Justin Trudeau and, therefore the government is merely expropriating private property via the will of the people.
Okay, great, but nationalizing private property is eerily similar to SLAVERY, and slavery as an economic system never worked out well; it’s one of the reasons civilizations struggled to evolve until slavery was abolished in most of the world.
Maintenance of a slave is difficult; a slave has nothing to lose, so if my business and the profits derived from my business now belong to the government, I as the FORMER business owner, am now disincentivized from making the business efficient, worse than that, most VOTERS know very little about business or how to run a business, and therefore these voters will imagine their climate change agenda to be as easy as flicking on a switch.
If you listen to people who are using the political process to pursue their climate change agenda, one of their CHIEF demands is excessive REGULATIONS on cO2 emitters. Well, if the government nationalizes an industry, the government will then be responsible for supply chains, day-to-day operations, employee pay, and energy.
What I’m getting at here is that a Gold Standard would quickly exploit the STUPIDITY of this climate change agenda; on the flip side, Fiat Money, along with central banks giving Justin Trudeau’s Federal Government the lowest interest rates possible for him and his voter’s STUPID IDEAS, allows for all sorts of financial and economic maleficence, which show up as INFLATION, while the economy is actually DEFLATING.
Dumb political ideas actually cause DEFLATION; however, because the world is using a fiat monetary system, and most countries have their own CENTRAL BANK that caters to the WILL of the “people”, all sorts of buffoonish political ideas and concepts can come to market.
When I listen to the current Governor of the Bank of Canada, Tiff Macklem, it appears that he knows the problem, but it’s not his place to tell voters how to vote or tell Justin Trudeau how to govern. Oddly enough, this differs greatly from former Bank of Canada governor Stephen Poloz, who, in my opinion, was a complete moron.
Most moderate Liberals believe that the government should do more, but they also understand why Socialism and Marxism destroy entire nations. So “progressives” often play that balancing act, but eventually, the Leftists take over the agenda and Progressives have limited means to push back against the Far-Left because if one government welfare program is good for the public, why not this other form of welfare,and this one, and that one?
And if the government found this magic money tree, isn’t it the Government’s duty to help ALL the “good” people in a society? Social Justice meets economic realities, is what we’re living through right now, and if you don’t understand that the money itself is corrupt, you will inadvertently assume that consumer price inflation can ALWAYS be contained without AUSTERITY MEASURES.
Interesting times ahead!