More signs that Inflation isn’t transitory and Disinflation is unlikely: Bank of Canada to hike rates by 50 basis points in April, meanwhile March 2022 inflation numbers 5.7% – April 6, 2022,
In Canada, the government consumer price inflation data reads that inflation reached a 30 year high in March? Now, if central banks want to get ahead of inflation they raise rates above the inflation data. So if interest rates were 5% the Bank of Canada should overshoot to raise rates to 6% to keep that number down.
Now, why the Bank of Canada refuses to do this is not only because the private sector is in debt but also because the Public sector is in debt and politicians have made all sorts of spending promises to voters that revolved around a lower interest rate environment. The reality of the situation is that Socialism and Communism don’t work in a market economy, so unless the government is engaging in some sort of State Capitalism system, the government shouldn’t be doing things it wasn’t designed to do.
Canada’s inflation rate surges to a fresh 30-year high | reuters.com
Justin Trudeau and the Liberal Party of Canada, have been engaging in deficit INVESTING. The term often used is deficit spending, but the proper term should be deficit INVESTING because when the government engages in social spending, the concept behind their idea is that if they redistribute income to people and businesses they imagine need it most, all of society will benefit.
Well, Justin Trudeau has been in power since 2015, we’re approaching 10 years with Justin Trudeau as Prime Miniter and his government investing has led to an even larger deficit. In fact, last year, because of consumer price inflation and other new taxes Justin Trudeau created, his government actually got a windfall of cash, and as soon as Trudeau got this money, he immediately thought of new things to spend the money on, the current Liberal government is disinterested in paying down the debt, which is where the Central Bank should come in.
Because even if a government wants to make new spending plans, it should pay down its prior spending plans first. In the private world, if citizens or businesses instead of paying down debt, kept expanding their balance sheet, they’d lose investors, they’d lose their purchasing power. Well, for governments, they don’t care about losing their purchasing power, because they simply give themselves a pay raise at the expense of everyone else.
On April 1, 2022, the federal minimum wage will increase from $15.00 to $15.55 per hour. For those working in provinces or territories where the general minimum wage rate is higher, the higher rate will continue to apply.
Federal minimum wage to rise to $15.55 per hour on April 1 | canada.ca
There are approximately 18,500 employers in federally regulated industries, including federal Crown corporations, which together employ 955,000 people (about 6% of all employees in Canada).
Governments’ money is derived from the Private Sector, a reminder that government finances itself via taxes that come from the private sector, so all of these pay increases are in many ways wealth redistribution schemes, furthermore, politicians also got a pay raise.
Poll: Nearly 8 in 10 Canadians against MP pay raise | taxpayer.com
Politicians and government being rewarded for incompetence, that’s what this is, in Canada, the Bank of Canada is a crown corporation, so it’s obviously complicit in all of this. My main reason for writing this is not only is inflation not going to be transitory, but it appears unlikely that we’re going to see disinflation without changes in the regulatory environment in this country.
Bank of Canada to hike rates by 50 basis points in April | reuters.com
Interesting times ahead!