Why inflation is so high, and how not to fix it by Tristin Hopper Reviewed: Consumer Price Inflation is the direct result of Justin Trudeau’s War on Fossil fuels – Understanding the Petrodollar – July 28, 2022,
During periods like this, I believe it’s a good time to educate, to avoid this disaster from ever happening again. Because we live in a Democracy, it’s extremely important to EDUCATE voters on basic economics. It’s extremely important that people do not CONFLATE asset price APPRECIATION with consumer price INFLATION.
We’re on a FIAT monetary system; not only are we on a fiat monetary system, but we also have a central bank. Money is produced and sold into the market by the government. The integrity of our financial system is the belief that debts will be paid off eventually and SERVICED in the meantime. The debts are NOT being properly serviced, the Federal government borrows money from the central bank.
All though people call it government spending because debts keep expanding, it should be called government INVESTING. In the private sector, if a business goes into debt, the bank will only expand the private business’s credit line if the business is generating more than enough REVENUE to service its debts at Prime+, whatever interest charges the bank is charging.
With the Federal government, even if the deficit continues to grow, the Central Bank can not only have a dovish approach to borrowing, but the Central bank might even lower its interest rates to accommodate Government spending/investing. Why many of us hate central banking is that by central banks lowering interest rates to accommodate governments, they’re rewarding bad government initiatives that would never work in the real world
An uneducated voter as an example, does not understand how important fossil fuels are to our standard of living, which also includes MEDICAL procedures by the way. So when Justin Trudeau declares war on fossil fuels and GRESSIVELY pursues a Green economic agenda, our PURCHASING power weakens now. Truth be told, the Central banks lowering of interest rates during the good times fueling the housing bubble was also consumer price inflation; however, buying a home is not the same as buying food.
Fossil fuels are EXTREMELY important to our food supply, and an abundance of fossil fuels makes food cheaper; when the government creates an ARTIFICIAL scarcity of fossil fuels, fewer goods and services can be made as COSTS will have to rise. Because Justin Trudeau can’t control what Saudi Arabia or Russia does, Justin Trudeau’s war on fossil fuels has to be a DOMESTIC war.
Justin Trudeau’s DOMESTIC war on fossil fuels makes Canadian industries more reliant on FOREIGN fossil fuel producers. Sure the government might charge foreign energy producers a TAX to sell in the Canadian market, but that equates to less tax revenue for the government as well as an increased reliance on foreign energy production.
They called fiat money, which includes the Canadian dollar, a Petrodollar for a reason, because, without a gold standard, which in compassion to fiat monetary system would be a commodity for commodity exchange, fiat money is confidence based, or Canada’s ability to PRODUCE THINGS FOR THE WORLD. Because, as I pointed out, Justin Trudeau can only declare war on a DOMESTIC Canadian energy, he’s providing foreign fossil fuel producers unnecessary pricing powers.
Via Trudeau’s carbon taxes, Canadian PRODUCERS, or I should say Canada’s ENTIRE PRIVATE sector is being straddled with NEW increases in costs! unlike ,the government private businesses can go bankrupt, when Justin Trudeau ,has a bad idea and the economy goes sour, the Liberal Government of Canada can not only make more promises to the voters but can also pressure the Bank of Canada to grant it favorably low-interest rates.
As I like to point out, private businesses do not have these sorts of powers, and the businesses that can influence government policy. Have to be generating the government a lot of revenue and also have a strong lobbying group. Obviously, Justin Trudeau is not interested in Fossil fuel lobby groups and I imagine in his own mind, he imagines himself as a hero, but in the real world his “heroic” economic stances are creating consumer price inflation.
If people are okay with destroying their standard of living, fine! But I don’t think it helps when people attempt to conflate asset price inflation with consumer price inflation because consumer price inflation is DEFLATIONARY for economic activity. Asset price inflation at the very least a business can use their asset price increases to make their business more efficient; consumer price inflation not only brings down asset prices, it also raises consumer prices because goods and services are becoming increasingly SCARCE because DOMESTIC Government regulations on the economy as an example have put an additional CARBON tax on businesses and INDIVIDUALS.
Interesting times ahead!