Justin Trudeau’s Current Regulations on The Canadian Economy are Deflationary; Government Spending is the only Tool he has: Canada’s Number one trading partner differs from the United Kingdom – October 14, 2022,
Someone at Reuters wrote an article about what Canada should do to avoid what is happening in the U.K. I’ve been noticing a consistency with writers and speakers imagining that government spending s the root cause of consumer price inflation. I like to remind people that government spending should actually be called “government investing.” governments spend on things like infrastructure in hopes of making the economy more PRODUCTIVE.
I’m well aware that the private sector is better suited to do almost anything the government does; however, DEMOCRACY/The Canadian voter wants the government to do certain things for society, so let’s stay with that concept and figure out what Justin Trudeau is doing WRONG. It’s one thing for Justin Trudeau to be a horrible INVESTOR, but it’s something entirely different when Justin Trudeau attempts to make it more difficult for his debtors to pay their debts.
By debts, I’m referring to TAXES; Justin Trudeau’s government makes its money by collecting taxes from the Private Sector, but Justin Trudeau has decided to declare WAR on his debtors. Justin Trudeau’s government decided to declare war on fossil fuels, going so far as implementing a CARBON TAX on the people who are in debt to the government of Canada.
In the United States, which is Canada’s largest trading partner, their president Joe Biden has his own war with Fossil Fuels. HOWEVER, Joe Biden has yet to implement a Carbon tax, meaning that American energy refiners or producers mainly have government REGULATIONS to deal with, but their consumers aren’t being hit with an additional carbon tax.
Furthermore, the U.S dollar has gotten stronger since Joe Biden took office in comparison to other currencies, thereby making IMPORTS to America cheaper. In Canada, the Canadian dollar has gotten WEAKER, and Justin Trudeau’s war on fossil fuels actually made the private sector(the sector that sends him money via taxes) in Canada SMALLER.
When the private sector in Canada shrinks, Trudeau will be reliant on HIGHER consumer prices to make up for the shortfall, but it gets worse for Trudeau because consumer price inflation is a DEFLTIONARY indicator for the Bank of Canada. By deflation, I could also use the words recessionary indicator for the Bank of Canada because if consumer prices are higher and wages are stagnant, not only does this mean FEWER tax dollars the Federal government can collect, but it also equates to the Federal government is at more risk to DEFAULTING on its debt SERVICING.
You might assume that defaulting on debt servicing in Canada is a long shot until you comprehend how many Canadians are RELIANT on the government to pay ANY of their bills. The Welfare State is a THING in Canada; whether you’re talking about folks on PROVINCIAL welfare or people reliant on a government Pension, these debt obligations must be paid and also must keep pace with inflation, which is why CASH FLOW POSITIVE GOVERNMENT INVESTMENTS are of the utmost importance.
One of the problems with Big Government is that there comes the point in which the voting public imagines that Depressions are a thing of the past and can’t happen in the modern era. This is where Canada is now; a lot of people who are dependent on GOVERNMENT WELFARE are finding it hard to believe that the gravy train is coming to an end.
I’ve been writing about AUSTERITY MEASURES for years now, and one of the scenarios I imagined with HYPERINFLATION, the current Bank of Canada(BoC) governor Tiff Macklem has been a surprise; instead of going NEGATIVE, which is what I initially thought, the Bank of Canada has been raising interest rates to combat consumer price inflation.
Now is the BoC doing this just so it can lower rates in the future? Or is it doing this because of consumer price inflation? I don’t know the answer to that question, but what we all do know is that the Bank of England BLINKED; because of the WELFARE crisis in the U.K, they’ve already resorted back to Quantitative Easing, meaning that the Bank of England has to COUNTERFEIT MONEY to pay it’s debt obligations.
Now, for those of you who imagine that the Conservatives are better with money than the Liberals, I remind you that it’s a CONSERVATIVE government in the U.K is attempting to save their dying welfare State. In Canada, I’ll give credit where it’s due; I haven’t heard a peep from Trudeau regarding higher interest rates, which is going to make his vote buying a lot more expensive.
The same is true in the United States; to date, Joe Biden hasn’t said ANYTHING about the Federal Reserve raising interest rates on his watch. Compare that to Donald Trump in the United States, who began complaining the moment the Federal Reserve began raising rates on “The Greatest economy ever.” Furthermore, consider current Conservative Party of Canada leader Pierre Poilievre, deciding to declare his own war with Tiff Macklem, who he claims is engaging in political bias.
Is there ever a time when a central bank is NOT political? So as you’re reading this, I hope you’re comprehending how FAR away the world is from considering AUSTERITY MEASURES as a quick fix to uncontrollable consumer price inflation. With that said, I’d argue the U.K is further along the hyperinflation road than is Canada; why? Because Canada LUCKILY shares a border with the UNITED STATES.
Europe is a hell hole of regulations, and the U.K is heavily reliant on trade with China and Germany. Germany has an energy crisis; something the U.K is not known for selling, China is heavily reliant on the U.S consumer and the U.K, under CONSERVATIVE leadership, also has its own war on Fossil Fuels. The former leader of the U.K often used the words “Build Back Better”; the U.K is, ofcourse, also heavily reliant on the U.S consumer regarding trade.
What I’m getting at here is that Trudeau’s current regulatory policies are the main culprit of CONSUMER PRICE inflation, and consumer price inflation is DFLATIONARY; although people think redefining RECESSION is a new thing, western governments have been redefining recession for DECADES, what’s different now is that the cost of ENERGY is getting more EXPENSIVE!
These higher costs of energy aren’t NATURAL higher costs either; they’re POLITICAL costs, Trudeau’s VOTING base wants to PUNISH productive people in the energy space and it’s pretty obvious to everyone that this is DESTROYING the welfare state in Canada, but for someone like myself, who studies ECONOMIC history, this has happened plenty of times before, and the end result are PERMANENTLY higher prices.
Why do prices get permanently higher? Well, first and foremost, WAGES are prices, and once the minimum wage or other wages go up, they’re likely not going to come down as we’ve observed with the U.K, not even the CONSERVATIVE governments want to engage in Austerity measures, which should tell you everything you need to know, about inflation being TRANSITORY.
Not sure how long it takes before humans realize that climate change is a FRAUD, but if they don’t ever reverse course on this Al Gore-derived fraud, hyperinflation is INEVITABLE, and sorry to those of you who imagine CENTRAL BANK DIGITAL CURRENCIES(CBDCs) is the solution, they’re not, government regulations TRUMP the money supply every single time and furthermore a central bank digital currency will also take away the appeal of the U.S dollar being DECENTRALIZED.
U.S dollars in CASH FORM is very important around the world, especially now that the U.S government has shown that it’s willing to CUT off U.S DIGITAL dollars to people or countries who don’t do what the U.S government COMMANDS of them. So if let’s say the U.S government goes FULL digital dollars, it means the U.S government will have a KILL SWITCH to shut down a person’s money anytime the U.S feels like it.
Even when Barack Obama paid back Iran, for the money the U.S stole from Iran, the Iranian government demanded to be paid in PHYSICAL CASH, the Iranian government wanted NOTHING to do with DIGITAL U.S dollars. So to all of you people who imagine CBDCs are coming, sure they might be, but that will likely spell HUGE changes to the current financial world order as people seek out DECENTRALIZED forms of BARTER. Nobody likes political money, people merely TOLERATE it.
We already have people using ART as stores of value. If you think humans won’t find other ways to avoid CENTRALIZED government money, you’re underestimating human behavior and the power of FREE markets. What I’m getting at here is that it’s GOVERNMENT regulations on economic behavior FUELING DEFLATION, the inflation genie is out of the bottle, and only AUSTERITY MEASURES can calm it down.
Sure Canada has a spending problem, but the real problem is the REGULATIONS problems, and nobody should underestimate how DIFFICULT it is to CUT government regulations because many instances, lobby groups exist to create monopolies for themselves; a lot of these lobby groups represent unions, even the Conservative Party of Canada leader how to BOW DOWN to the supply management cartel.
Govenment regulations are indeed MONOPOLIES, and the U.K, like Canada, has a plethora of monopolies that may even go BANKRUPT if Austerty Measures become the new normal moving forward. Pensions are a form of welfare whether you like it or not, and in order to pay out pensions, a lot of these CARBON CHANGE regulations on economic output will have to DIE!
Because a lot of businesses have already gone bankrupt via these climate change policies, I remind the reader that economic recovery is not guaranteed to be SWIFT. Likely the people who like the direction the world is heading in will FIGHT like hell not to allow austerity measures to happen, and this fight will cause CONFUSION among people who don’t understand what’s going on.
For myself, this is why HIGHER INTEREST rates should be the new normal, but I don’t control the central banks. It wouldn’t surprise me if the Central Banks give up. Either pause their rate hikes and start bringing interest rates down again, which will REWARD governments who will be happy to start spending money, which will ACCELERATE consumer price inflation.
Canada and the U.K are headed for DEFLTION, but I imagine the U.K gets to depression first because Canada borders with the U.S, and a lot of Canadian producers like getting paid in U.S dollars because it helps their profit margins when they convert U.S dollars back to Canadian. The problem Trudeau has created is that he’s been a HORRIBLE investor and continues to SQUANDER and waste the money he’s collecting in taxes while simultaneously borrowing more money from the Bank of Canada, which is now being forced to raise rates.
So Canada, in actuality, has more of a MANAGEMENT problem, whereas the U.K blatantly has a systematic problem. Yes, Canada’s problem is systematic also, but for as long as American DOLLARS are in huge demand and America continues to be one of the freer ECONOMIC nations on the planet, Canada’s welfare state under the right management can benefit economically from it, where as the U.K which has a more diverse economy and doesn’t border with the U.S has to be more creative with dealing with its economic woes.
Interesting times ahead!