Deflation? Inflation?

 

The price of regular gas in this community is now 232.9 per litre, a new high on its way to $4, I expect. The price of crude eventually will come down, at least relative to other commodities and services, although maybe not in nominal dollar terms if inflation is not curbed. The price of fuel can only rise to the point where the economy is crippled and demand is curtailed. It may well be that many other prices will fall then too. With everyone speaking about inflation, it should be no surprise if deflation is this economy’s destiny.  As credit contracts, due to decreasing demand, inflation may exhale its last breath sooner than we think. Of course, central banks could lose their nerve and open the floodgates again, but one might wonder if it would reignite price inflation once a deflation has become the expectation. I am reminded of Herbert Hoover, whose large budgetary deficits failed to reverse the deflation of his day.

Abortions and Day Care

 

Someone moaned to me recently about the reversal of Roe v. Wade --- the unjustness of it. Around the same time I heard a radio interview with someone else who lamented that we have so few abortion facilities in Canada, and they told of a guy that drove home in northern Saskatchewan from his remote work site in Alberta to drive his wife to Regina for an abortion. He had to stay awake that whole time, and then he had to drive her home and back to work to start his shift. The interviewee tried to elicit sympathy from the listeners, one of whom was me, except I was thinking “Poor murderers. How sad for them.”

The news from the USA prompted numerous politicians here to assure the sheeple that they will still be able to get an abortion in Canada anytime during the pregnancy. They make the process seem antiseptic --- no thought of scalpels sawing limbs off of babies or of saline solution burning off their skin and eventually killing the child if it’s lucky. They don’t tell us that the central nervous system can be seen to be developing from day 10. I explained my concerns to the person mentioned in the first line above, and added that a country where the population pyramid looks like ours, because the replacement rate is under 1.5 children per female, needs to be encouraging births. 

We need to make it easier to want and to raise children. I don’t often praise the Canadian government, but I do appreciate the efforts being made to make child care more available and to make immigration easier than it sometimes has been. We need more of that. We need to help parents. We need to particularly help single parents. Doing so is good for our children and good for the future of our country.

Twisting Poilievre to Make Him Break

 

Pierre Poilievre is stepping on a few toes……a lot of them actually, if the comments of journalists and other Conservatives offer clues. I find that he is being attacked by people who should know better. They are twisting his message.

The two main issues of the attacks seem to be Poilievre’s promise to fire the Governor of The Bank of Canada and his assessment of the cause of inflation.

I hear Conservatives and journalists alike accuse Poilievre of wanting to compromise the independence of the central bank by political interference. It’s nonsense. First, it is the PM that appoints the Governor. How is that not political interference? But second, and this is the big one, Poilievre’s lament is that Tiff Macklem compromised the independence of the central bank when he expanded the bank’s assets by the same amount and at the same rate as the Trudeau government was running a deficit. The Trudeau gang wanted an annual deficit of $150,000,000,000, and the Bank of Canada expanded the money supply by that amount to comply. How is that right? The Governor is tasked with avoiding inflation of more than 2% per annum, and he expands the money supply by far more. He knows better, and if he doesn’t, he should not have the job. Either way, he is not fit for the post. Poilievre wants a Bank governor that has a backbone --- someone who will resist political pressure.

People defend Macklem by saying that inflation is a worldwide problem. Effectively, it’s okay that he went along with the crowd instead of doing what’s right. This country now has a lot of hungry people because of that behavior. But NO, inflation is caused by high oil prices, the Ukraine war, disrupted supply chains, and anything else that doesn’t cause it. That’s the silliness being fed to the public now. Do a little thought experiment. If there is a fixed amount of money available, and people are spending more of it on gasoline, then they will have to spend less on other things such as food items. In a more or less free market, prices bring supply and demand into an equilibrium. Almost all food items have substitutes; therefore, demand for any particular food item is elastic. If you have less money to spend on a food item because you filled your gas tank, you will buy less because you have less money with which to make the purchase. Suppliers will tend to drop the price to achieve economic equilibrium. Higher oil prices will tend to make lower movie ticket prices, as a hypothetical example. Inflation is the result of an increased money supply when there is not a corresponding increase in the production of goods and services.

Poilievre is trying to bring reality into the dialogue. I hope he persuades enough people that he can become CPC leader and subsequently PM. Let’s see if he can stick with his principles. If so, this country may have a brighter future than it does under the progressive socialist coup that is based on the principle of sharing the poverty.