With inflation pushing 6 per cent, and federal debt up about half-a-trillion dollars in two years, Canadian macroeconomic policy is a mess. It will get worse. The Bank of Canada is moving to get inflation down – applying the brakes. The federal government’s budget this week will show tens of billions more borrowing and spending – foot firmly on the gas. Monetary tightening and fiscal excess prefigure a wild economic ride ahead. Perhaps a recession.
Saying “recession” might seem alarmist. The economy is on a tear. Employment is well above, and unemployment well below, where they were pre-COVID. Economywide spending rose an eye-popping 12 per cent over the past year.
The problem, though, is that this surge owes so much to…
La guerre en Ukraine force la Chine à ménager son ami russe et son client occidental, de crainte qu’elle ne fracture la mondialisation en deux blocs.
Les sanctions économiques rompent un à un les liens entre la Russie et l’Ouest. Le coût est élevé pour l’Europe, mais désastreux pour la Russie. Cependant, aucun retour en arrière n’est possible tant que Vladimir Poutine sera au pouvoir, tant que le régime restera en place.
En marge des Jeux olympiques de Pékin, Xi Jinping et Vladimir Poutine se sont jurés une « amitié sans limites », reposant sur une vision commune d’un monde menacé par les États-Unis. Malheureusement pour eux, « l’opération militaire spéciale » en Ukraine n’a pas connu le triomphe espéré…
What explains surging inflation in Canada and many other advanced economies? Most commentators — correctly — blame loose monetary policy. That contrasts with the 1970s and 1980s, when many people argued inflation was not something central banks could control and that tight money was therefore a case of pain for no gain. With the Bank of Canada and other central banks beginning to tighten, those arguments may return. If they prevail, monetary policy will stay too loose and inflation will keep raging.
Inflation is another term for a persistent decline in the value of money, which like most values is determined by supply and demand. If the Bank of Canada promotes growth in the supply of Canadian dollars that exceeds growth in the…
