WARNING⚠️ Canadian Dollars Are Guaranteed to lose Their Domestic Value: Ontario Premier Doug Ford Lost Legal battle against the Federal Carbon Tax at the Canadian Supreme Court – September 7, 2022,
I’ve been focusing a lot on CURRENT consumer price inflation, completely ignoring the consumer price inflation that’s on its way, the article below details consumer price inflation that I’ve failed to write about on this blog because, quite frankly, current inflationary spikes, have stolen the limelight. But the consumer price inflation coming was actually made legal by the Supreme Court of Canada, and I have to point out that a lot of the Left Wing judges at the Supreme Court of Canada were put there by former CONSERVATIVE Prime Minister Stephen Harper.
I’m not exactly the biggest Donald Trump fan, but you can see why I think the number was north of 74 million Americans who voted for him. One of the reasons Joe Biden is having a difficult time with his far Left agenda is because of Donald Trump’s supreme court picks. In Canada, it should have been obvious to Stephen Harper that he would have lost eventually, and when he lost, he’d want to make sure there was a properly constructed balance of power.
Because the Supreme court in Canada swings HEAVILY to the Left, from an economics perspective, Justin Trudeau will likely do permanent serious and detrimental economic harm to this country when he’s finally outed. You’ll notice that consumer price inflation GLOBALLY became a problem when this war on fossil fuels began; asset price inflation(home prices going up in value as an example) is one thing; consumer price inflation is something entirely different.
Consumer price inflation is DEFLATIONARY to economic activity, whereas asset price inflation could actually stimulate economic activity. For example, if my house goes p n value and takes the equity and potentially starts a cash flow positive business. With consumer price inflation, economic growth will have to revolve around WAGE growth, which in the minds of some is simple, “just raise wages,” not so simple one of the reasons Canada lost so many manufacturing jobs was because of artificially high wages. Without manufacturing jobs, fewer INCOME TAXES, which are productivity taxes, are collected.
Why should a private business pay Canada an inflated wage to build their widget when they can have that same widget made in China, India, or Vietnam for a fraction of the price? The Canadian reseller the manufacturer sells to pays the Canadian tax/tariff. Then the Canadian reseller, which could be a Walmart, a Costco, an Amazon reseller, etc., tries to find a way to make a profit at the expense of the Canadian consumer.
If the reseller can’t make a profit, that’s when you get SHORTAGES of things; Let’s say the customers do not want to pay an extra $2 on a widget; well, the reseller in that instance, will stop selling it. Why I bring this up is because the increase in Carbon Taxes mentioned in the article below revolves around industrial emitters, many of whom I imagine might have the U.S as their target customer. A lot of industrial entities in Canada, primarily manufacturer to sell their product to the United States, but this puts Doug Ford in a very tough spot.
Most Canadians don’t know the differences between Provincial and Federal politics; Left Wingers tend to thrive off the ignorance of the population. If prices in Ontario start rising, and let’s say I lean more to the Left politically, I’m going to blame Doug Ford for the price hikes. You’ll notice almost every other week, Justin Trudeau is making another spending promise.
When the Federal government spends, and its cash flow is not increasing, this leads to economic deflation. Last year(2021), Justin Trudeau was the beneficiary of Consumer price inflation. Eventually, the CONSUMERS change their behavior and begin to spend less because they have less money to spend. I was reading about record credit card debt levels in Canada.
As I pointed out in the article above, asset price inflation differs greatly from consumer price inflation; consumer price inflation is DEFLATIONARY to the economy, whereas asset price inflation could create a boost to economic output. Now, as I’m saying this out loud, I have to remind myself that some of you might imagine that the Bank of Canada lowering interest rates will solve this problem, but NO, you’re WRONG; first and foremost, consumer price inflation rises the COST OF LIVING as well as THE COST OF DOING BUSINESS!
This means that if let’s imagine, the value of my house just went up in value if I were to suck out that equity and start a new business, my OPERATING costs for my new business would have also gone up. In contrast, my consumer/my customer might have less disposable income to spend. I’ve been calling this “Late Stage Socialism” for a couple of years now.
In the minds of most people, they think what we’re experiencing now is an easy fix, and based on my data, solving this problem, if anyone wants to solve it, will require AUSTERITY MEASURES. Sorry, Central Bank Digital Currencies WILL NOT fix this problem, this is a SYSTEMATIC problem that’s causing a serious misallocation of resources, and you’d be wise to pay attention to it, because as an example, the carbon tax, where is that money going exactly?
The government decides where that extra capital goes, and unlike the free market, which allows money to flow to where it’s being treated best, the government, Federal government has an IDEOLOGICAL agenda for where the carbon tax money should flow, even if it flows into the hands of voters, you have to remember that most voters CONSUME more than they produce, meaning that if Trudeau uses the carbon tax as a vote-buying scheme, it’s DEFLATIONARY to the economy, because if these voters do not know how to be cash flow POSITIVE, none of the money Trudeau is investing in them will yield positive cash flow.
Although this post revolves around Ontario, the truth is that this was a SUPREME court ruling, meaning every province in Canada will be affected for the foreseeable future. In closing in regards to the Canadian dollar, I can’t predict what happens in the Forex markets, but if you look at the European Central Bank and their reluctance to raise interest rates, has the Euro, as of today’s date, trading at Parity with the U.S dollar, in fact at the exact time of this post, $1 US dollar can buy €1.01.
Why do I bring this up? Canada’s reliance on IMPORTS, if let’s imagine the Governor of the Bank of Canada Tiff Macklem lowers interest rates, and the Canadian dollar falls? If you think consumer price inflation is bad now, you just wait until that happens. Now, yes, if the Bank of Canada continues to raise interest rates, asset prices might come down. However, not all Canadians are indebted, so the added interest some Canadians will get on their savings accounts might encourage them to spend more while at the same time keeping inflation down.
Now, if rates rise, the Federal government’s debts will start to balloon, and some Canadian consumers may even experience bankruptcies. But the central banks are supposed to prevent economic DEFLATION; that’s their number one reason for existing. People who don’t understand Capitalism, which in many ways is a CONVENIENT form of barter, fail to comprehend that capitalism is inherently DEFLTIONARY, and this angers Governments because when the economy deflates and the government doesn’t have control over the money supply, the politicians look stupid in the eyes of the voting public.
If you notice, most people look at politicians like Kings, Queens, rulers of the galaxy, etc; this is where the demand for socialism comes from. So if the economy begins to DEFLATE, the people look to their “leaders” to do something about it, and when it becomes evident that the emperor is wearing no clothes, well, from then on, anything can happen.
If you ask me, that’s where we are headed in Canada; Tiff Macklem is in a damned if you do, damned if you don’t scenario; now, I hope Tiff continues to raise rates until austerity measures are implemented, but that’s wishful thinking on my part, how Tiff interprets the data is how he interprets the data and the country will have to deal with whatever he does.
What I will say to you, the reader is NOT to take the article below lightly; it’s not strictly an Ontario problem; this is now the law of the land. This was a supreme court ruling, and prices all over Canada because of Trudeau’s war on fossil fuels will be going up, so you would be wise to prepare for it starting today.
Interesting times ahead!