Quote of the Day: “The feeling that the government should ‘do something’ has seldom been based on a comparison of what actually happens when government does and when it does not ‘do something’.” Thomas Sowell
Bonus Quote of the Day: “Inflation is always and everywhere a monetary phenomenon, in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output.” Milton Friedman
Today’s Editorial talks about “Pierre Poilievre’s simplistic explanation for runaway inflation, and then his troubling proposal for saving the economy. “ The Bank of Canada has at it’s major goal, to control the monetary supply to keep inflation between 1% and 2%. They failed. The reason they failed is because they, as the editorial correctly states, purchased “hundreds of billions of federal government bonds during the pandemic.” While the economy was shrinking from the self destructive COVID-19 lockdown policies, there was a “rapid increase in the quantity of money” because of the BofC’s actions. This leads to the huge, greatest in 40 years inflation rate we have today. Sure, there are other external influences, but we have far more money chasing far fewer goods and this is the main cause of inflation. The Editorial concludes with this gem: “Were Poilievre to get his way, he’d undermine the independence and credibility of the central bank, thereby shaking the confidence of investors looking at Canada as a place to put their money. Whatever Poilievre’s selling, Canadians shouldn’t buy it.” Actually, just the opposite is true. Creating a stable inflation rate is one of the main drivers of investment since inflation erodes current and future profits. Having huge, unsustainable, Keynesian driven deficits (as Editorial after Editorial have suggested), is the reason we are in the pathetic situation we have currently.