Discover more from Caleb’s Politics
Justin Trudeau's Monetary Policy
The clown PM just handed the Opposition their wedge
Less than a week into the election and I'm already frothing at the mouth over what Justin Trudeau has said. And yeah yeah, I'll get to the Afghanistan news in a bit. Or maybe I won't. I've been beating the same drum now for over ten years and if you want a more in-depth and informative take on it, I suggest reading everything Scott Horton has put out. But as for the Canadian election – let’s discuss what pretty-boy Justin just said.
Here's the quote getting my panties in a bunch: “When I think about the biggest, most important economic policy this government, if re-elected, would move forward, you’ll forgive me if I don’t think about monetary policy. You’ll understand that I think about families.”
Goddamn, I hate this man more than I've ever hated any politician. This must be how progressives feel about Donald Trump. How Hunter S. Thompson felt about Richard Nixon. I can – and will – spend the next 1000 words explaining exactly why this statement is boneheaded stupid and dangerous. Yes, dangerous. The leader of a country of millions doesn't think about monetary policy because he's busy thinking about families. How anyone thinks this trust-fund doofus is qualified to be prime minister is so far beyond my realm of understanding I can't help but think his supporters must also be brain dead or incredibly gullible. Justin's statement is like a NASA engineer saying he doesn't think about physics because he’s too busy building rocket ships.
And the analogy is apt too. A NASA engineer doesn't have to spend every waking moment thinking about the science underpinning his rocket ships. But if he wants to build a successful rocket ship, he needs to think about what makes the process possible. What allows Justin Trudeau to spend millions of taxpayers' money we don't have? What allows him to run deficit after deficit putting today’s children and young adults on the hook for the extravagances of the boomers? What allows him to borrow other people's money at low-interest rates? You guessed it – monetary policy.
So first, a little reminder about what “monetary policy” even is. Officially speaking, monetary policy is about setting “inflation targets” because in the mainstream inflation is presumed to be a naturally occurring aspect of the free market. According to this worldview, inflation means rising prices or a lower purchasing power of the money. In actual reality, central banks create inflation by a process called “open-market operations” where they credit the chartered banks with reserves without debiting their accounts in the process. It is literal money printing hidden under the guise of financial terms. Adding insult to injury, the chartered banks’ pyramid on top of these reserves. So for every dollar received, they loan out, what, $10? Their reserve requirements have been steadily declining for the better part of 50 years. I'm not sure what the current levels are but I can't imagine it's good. Think about when you go to the bank. You're not “depositing” your money, you’re loaning it to the bank and in turn, they loan it out to other people. Banks have been doing this for as long as there have been banks. It's called fractional reserve banking. You can imagine if other businesses operated this way. Storage units? No problem, let me just loan out your shit since you're not using it in the hopes that when you return for it, I'll have gotten it back or at least replaced it with newer, better, shit.
This is why governments and banks hate gold but it is crucial that a liberal democracy calling itself a free society should have a strict gold standard. If you deposit ten ounces of gold in the bank and they take it and loan it out to nine people who pay it back with interest, then you'll never know the gold was gone. But what if you come back for your gold and they don't have it? What if everyone did this? What if the “paper gold receipts” floating around the economy, acting as money, become worthless because the bank is incapable of repaying its customers with their physical gold? Then you have a bank run. It is a beautiful thing to see bankers face consequences for their fraud. But people tend to have a bad habit of sacrificing freedom and volatility for illusions of security and stability. So in the end we've lost this power the masses have had over banks. We can't bankrupt them by voting with our feet. In fact, when they bankrupt themselves through corruption, the government is there to step in with taxpayer bailouts.
But I'm going too far off on this tangent. Let's settle down with something more simple. Regardless of whether you think inflation is a) natural b) bullshit caused by banks or c) intentional bullshit started by banks because they control the world through Illuminati-style meet-up groups - regardless, inflation means higher prices for everyday Canadians. It means your paycheque is buying you less. It means higher rents, mortgages, and litres of gasoline. It means your grocery bill is either higher or the size of your food is getting smaller. Anyone notice that? Bacon used to come in packages of 500 grams. It's still the same price but now it's down to 375 grams or less. At least where I am...
Don't take my word for it, though. There was once a Bank of Canada Governor who understood how destructive inflation was. He was ousted by the Diefenbaker government but he was Canada's only decent central banker. He said, in 2005, “I don’t even like to think of inflation at the rate of 1 per cent a year because after thirty years, what have you got? Savings are cut in half, if you had any savings.” His name was James E. Coyne. And he wasn't alone. A.C Ashforth, president of the Toronto-Dominion Bank in 1956, wrote in his annual report, “unless we keep the purchasing power of the dollar on an even keel, we destroy savings and thrift.” Coyne also said, “Inflation is particularly insidious in that it seems to some to encourage production and employment and expansion for a time, but it continually cumulates excesses, distortions, inefficiencies and injustices which in due course produce recession, loss of confidence, and contraction.”
In other words – monetary policy can't escape the hangover theory. Just like with booze, you can print money and have a party. Everyone will look rich. Of course, in our system, the well-connected at the top get their hands on the new money, but let's say the Bank of Canada credited the Ministry of Finance instead of the chartered banks, let's say the federal government sent everyone a cheque in the mail of equal amounts. Everyone will seem rich. You'll go out and buy things or pay off debts you've been carrying around. But all the new paper (or digital) money won't create additional resources. More stuff doesn't get created just because people have the money to buy it. You have to produce things before you consume them. Failure to do so results in recession. With alcohol, you’re borrowing happiness from tomorrow. Get drunk, have a good time, wake up hungover. Likewise, print money, feel like you’re rich, then watch prices rise and entire sectors of the economy crash (like real estate).
You need capital to have capitalism. To have capital, you need savings. And how can you have savings when official monetary policy is routinely debasing the purchasing power of the money?
This is why bitcoin is so popular. This is why I have my savings in gold and silver. I am well aware I can't “eat gold bars” if shit hits the fan. But you can't eat paper money either. But back to Justin Trudeau's idiotic quote. You see how dumb that is now, right? Families struggle with inflation every day. They see it at the gas station, in the grocery store, reflected in the paycheques. For Justin to say he doesn't “think” about monetary policy because he's too goddamn concerned with your family is creepy, cultish, and absolutely insane. And dangerously moronic. I'd be happier seeing a golden retriever leading the Liberal Party. In fact, I might even vote for them if they did that.
Now, I've been bitching about this for going on over ten years now... since early 2009, actually. So why the interest all of a sudden? Why did a reporter ask Justin Trudeau about monetary policy of all things? Mostly because all this COVID money printing has now made its way into the data and not even the officials at the Bank of Canada can pretend like things are fine. Inflation hit 3.7 per cent in July – the highest reading in over 20 years. Officially, inflation is not supposed to go over 3 per cent, a policy set by the federal government. If Justin Trudeau really gave a fuck about families (he doesn't) then he could declare the new target to be 0% inflation and Canadians could watch their purchasing grow. Eventually, we wouldn't have to work 40+ hours a week to make ends meet. Housing prices could come down since we won't be pumping the economy with newly created money. In other words, the rich will still get richer but the poor won’t get poorer. And the rich who rely on new money and special privileges rather than producing goods and services people actually want to buy will be hurt.
Thankfully, Conservatives have recognized the potential to make this an election issue. “The simple fact is that Justin Trudeau has made life less affordable for Canadians,” says Conservative Leader Erin O’Toole. “Regular Canadians are struggling to make ends meet.” An Angus Reid poll shows that, among the Canadians for whom the economy is issue #1, the Conservatives are far more popular (and trusted) than pretty-boy Justin and his lying Liberals. And with the recent upset in Nova Scotia (where the Liberals called an election thinking they'd win only be ousted by the Conservatives), things could take a turn for the worst for Justin, which would be the best thing for the country.
But ultimately, it isn’t just Justin who has made life less affordable for us. It’s the entire goddamn system. We are using monopoly money. Like tokens at a carnival. This is not what a free society uses for its money. If there’s any lesson we can take away from the last 20 years and the entirety of the 20th century, it’s that the Separation of State and Money is just as important as the Separation of Church and State.