Also available at mises.caNo surprise here, I've always maintained that the Bank is the greatest threat to Canada's economy. Forget "using" the Bank to print money without debt, the Bank of Canada needs to be abolished. The recent news concerning inflation is just another example in a long list of central bank fuck-ups.
Consumer prices rose 3.2% this year, above the official inflation target. You see, in order to keep politicians out of the Bank's affairs, the Department of Finance agrees to allow the Bank to conduct monetary policy at an arm's length. Part of this agreement is keeping inflation "low and stable", but having energy prices advance 12.5% in one year isn't exactly subtle.
Even though the real measure of inflation (the M3) has been growing nonstop since we abandoned sound money, an official 3.2% number is bad publicity. With interest rates at 1% and the Canadian Savings Bonds paying only 1%, it seems that whatever Canadians do, they're going to lose their savings. Except of course if they buy gold or silver.
So what will be Mark Carney's excuse? Will Flaherty try to play this down, or give Carney a purely symbolic slap on the wrist? Who knows.
Regardless, the government is already working on the solution to the problem they've created. The problem being a devalued currency based on flawed economics. The solution is to get government completely out of the money-creating business (i.e. legalize competing currencies and deregulate the banking sector). But governments don't like to hear that they're to blame. They'd rather involve themselves even further.
This issue is no different.
The House of Commons Financial Committee, encouraged by Liberal MP Scott Brison, will examine if the Bank should include "full employment" in its mandate. Since Henry Hazlitt debunked the "full employment" fetish over fifty years ago, I see little reason to repeat his conclusions here. Simply, employment is a means to an end. Not the end itself.
Meanwhile on the international stage, Kenneth Rogoff, former chief economist at the IMF now at Harvard, is urging the U.S. Fed to set an inflation target of 6%. To help combat the current economic crisis, of course. At 6% inflation (even by official standards) the US dollar will lose half of its purchasing power within a decade.
Will the Bank of Canada follow suit? Hard to say, Canada has a history of being pretty conservative with monetary policy. Yet as a majority of Canadians accept our absurd health-care system without question, it shouldn't be any problem for the establishment to brainwash the masses into accepting further lunacy in monetary matters.
Tanstaafl Canada.
Probably the dumbest thing I've ever read. Did you post this from an Occupy protest? Idiot...
ReplyDeleteHaha, are you William Feader?
ReplyDeleteThe really sad thing is that having an "inflation target" is in itself an admission that there is a systemic problem, but one that the gatekeepers always position themselves as "fighting" rather than "causing".
ReplyDeleteKeep up the great posts, Caleb.
Absolutely, Anonymous. Even with "low and stable" inflation at 2%, our dollar still loses 34% of its purchasing power over a period of 15 years.
ReplyDeleteThank you for the kind words.