Losing the Thread

Driving past the gas station today Regular is $1.67 a litre. At the grocery store some perfectly ordinary eggs were $8.00 a dozen. Butter is $6.50 when not on sale.

On Canada Day some addled youth decided it would be a good idea to toss the statue of Captain Cook into the Inner Harbour. I rather doubt they had any idea who the great explorer and cartographer was, but he looked very 18th century and that was enough.

Over seven hundred people died during last weeks’ heat wave with around five hundred of those deaths attributed to the heat. Ambulance wait times went to over three hours.

Various polls suggest that Justin Trudeau is within sight of a majority were a federal election to be held now.

The remarkable thing about all of these little snippets of news is that they seem to be regarded as business as usual. Being taxed by an inflation rate which is well into the double digits does not cut through the COVID hype. Vandalism and arson purportedly in rage over residential school deaths which we have known about for decades attracts very little comment – though many First Nations people are not very happy that reservation churches which have served their communities for years are being burnt. People seem to shrug off the heat wave deaths and ambulance delays.

I expect very little from government at any level. A reasonably sound currency, a degree of public order and emergency services which can deal with the inevitable surges in demand.

The emergency services issue is probably the most easily fixed. Yes, having more para-medics is part of the solution but planning a reponse to these sorts of surge emergencies which tries to avoid the need for an ambulance in the first place is important too. Most of the dead were old, in many cases, very old. It should not be impossible to identify those older people and have a plan for these sorts of emergencies. Something as simple as a “Helpful Neighbour” program on a voluntary basis would be a good first step.

Restoring public order is more complicated. First, you have to have the political will to actually take on the problem. As we saw a couple of years ago, when it comes to people purporting to act on behalf of First Nations/environmental causes that will is absent. But even if the politicians decided that enough was enough there needs to be an investigation and an understanding of how the “spontaneous” vandalism and arson and blockades are driven. That is going to require rooting around in the activist community which will be, to say the least, difficult. The people who are actually creating the public disorder pay close attention to operational and communications security. Suffice to say this stuff is not being organized on a Facebook page.

Restoring order is also going to require a look at who benefits from disorder. To take an example: was it co-incidence that the sad fact of the Kamloops residential school graveyard came up just as the inquiry into Canada’s Winnipeg Lab’s connection to the Wuhan virology lab was heating up? The fact of there being a graveyard had been know for decades. The ground radar was being used to determine the boundaries so a new fence could be built. Yet, somehow, the number of bodies became headline news. I suspect, but cannot prove, that this was no accident. Public order will be restored when disorder is no longer in anyone’s interest.

Inflation is more complicated still. First off, the Liberal government and the Bank of Canada seem skeptical that there is any inflation worth mentioning and, if there is, seem convinced that it will be transitory. Second, the Liberals seem to think that with interest rates at record lows, borrowing lots of money makes a ton of sense. Third, the tools available to reduce inflation are all politically painful: reducing deficit spending means saying “no” to program and benefit expansion. Raising interest rates, even a little, would increase the cost of the government’s debt and the debt which Canadians have taken on in buckets during COVID. Plus, there is a federal election coming and no government wants to even tap on the brakes at the risk of losing votes.

In the past, inflation was largely self correcting. At a certain point the government would no longer find buyers for its bonds and would have to raise interest rates until it could. That brake has, to a degree, disappeared now that the Bank of Canada has decided to purchase government debt in apparently unlimited amounts.

The Modern Monetary Theory people will think this printing is a very good thing. I suspect it isn’t. What it creates is asset and price inflation. The $6.50 butter becomes $9.00 and the $1.67 gas becomes $3.00. But wages and salaries and even government benefits, are unlikely to keep pace. This clobbers the benefits, working and middle classes.

At the moment virtually all the Western economies are printing money fast and that means that the Canadian dollar is holding its value relative to other currencies. How long that will be the case remains to be seen. Similarly, interest rates are crawling along at less than 1%. Will that continue? I doubt it.

Bubbles burst. Eventually the dislocations caused by too much money in the marketplace will disturb and then dis-combobulate the system and the inflation will have to be squeezed from that system.

Politically, printing money is much more satisfactory than raising revenue and decreasing expenditures. There will be no action at all taken on inflation before the next federal election and it is not obvious that there will be any taken after. It is not obvious that Trudeau or his Cabinet have the foggiest idea that any of this is a problem. Nor, frankly, is it clear that O’Toole and the CPC would be much better.

The ideas of a stable currency, public order and good emergency services are beginning to sound a bit antique, quaint as it were. However, I suspect we’ll miss them when they’re gone.


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