Zelmer, Kronick – Cryptocurrencies No Defence Against Inflation

Can cryptocurrency protect you from inflation? – Globe and Mail Op-Ed

People have many happy expectations of cryptocurrencies as they look for ways to conduct their financial affairs outside the traditional financial system. They hope that, as crypto and its supporting blockchain technology mature, there will eventually be no delays in settling their transactions, cheaper cross-border transactions and no pesky fees on bank accounts, among other advantages.

Many also imagine that crypto assets can protect them from rising inflation. That, however, is one benefit crypto assets do not offer.

Crypto assets such as bitcoin and ethereum and their decentralized blockchain technology offer the promise that, at some point in the future, it may be possible to price goods and services and have one’s…

C.D. Howe Institute Monetary Policy Council Calls for Bank of Canada to Raise Overnight Rate to 1.00 Percent Next Week and 2.25 Percent in a Year’s Time, and Shrink Bond Holdings

April 7, 2022 – The C.D. Howe Institute’s Monetary Policy Council (MPC) recommends that the Bank of Canada raise its target for the overnight rate, its benchmark policy interest rate, by 50 basis points to 1.00 percent on April 13th. The MPC recommends further increases over the coming year: to at least 1.25 percent in June, 2.00 by October, and 2.25 percent by April 2023. It also recommends that the Bank reduce its holdings of Government of Canada bonds between now and its May overnight-rate target announcement.

The MPC provides an independent assessment of the monetary stance consistent with the Bank of Canada’s 2 percent inflation target. William Robson, the Institute’s CEO, chairs the Council.

Council…

William B.P. Robson – The Federal Gas Pedal Meets Bank of Canada Brakes

On inflation, the government and the Bank of Canada are pulling in opposite directions – Globe and Mail Op-Ed

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…

Bafale, Kronick, Robson – Monetary Policy Is Our Only Inflation Fix

Only tighter money can keep the dollar from shrinking – Financial Post Op-Ed

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…

Canada has blown through our fiscal guardrails. When will our federal budgets reflect that? – Globe and Mail Op-Ed

The budget that federal Finance Minister Chrystia Freeland will present shortly will reveal whether the government is serious about putting the national finances on to a sustainable track.

There is room for doubt. Since 2015, the government had been running deficits larger than it promised, and larger than a strong economy justified. Then it responded to the COVID-19 pandemic with debt-financed spending on an unprecedented scale.

To assuage concerns about soaring federal debt – concerns heightened by the government’s equally unprecedented failure to present a budget at all in 2020 – the Finance Minister introduced a new concept in the government’s fall economic statement that year: fiscal…

Ambler, Kronick – The Upward Rate March

S4 E4: Getting Serious Shadow Budget 2022 with Bill Robson

Oceans of liquidity mean rates will have to keep rising – Financial Post Op-Ed

The Bank of Canada’s decision on Wednesday to start raising its target for the overnight rate of interest reflects its recognition that inflation has turned out to be higher and more persistent than it had been expecting, and that slack in the economy has now been absorbed, also faster than expected: as recently as December the bank had predicted slack would persist until the middle of this year.

Wednesday’s announcement stressed supply-side factors as the main reasons for high inflation: poor harvests and higher transportation costs, and higher energy and food-related commodity prices resulting from the invasion of Ukraine.

But there is another, often-neglected, demand-side factor that will…

William B.P. Robson – Inflation May Be a Surprise – Higher Interest Rates Should Not Be