THE CANADIAN GOVERNMENT DID THE RIGHT THING BY RAISING RATES TO CUT DOWN INFLATION. WHAT ELSE COULD THEY HAVE DONE?

THE CANADIAN GOVERNMENT DID THE RIGHT THING BY RAISING RATES TO CUT DOWN INFLATION. WHAT ELSE COULD THEY HAVE DONE? YOU CAN’T BLAME THEM FOR EVERYTHING. Political statement. Inflation will be beaten.

Investor Asked on May 11, 2023 in Real Estate.
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If you think my pearls of wisdom are political you are wrong. I have argued against continuous government spending in 5 books and a thousand stories (starting in 1995 in my book “Forget About Location”). Simplistically, Keynesian thinking was, spend in slow times and pay it back in good times. However, our government decided to  dramatically increase government spending in good and bad times and then – to boot – crash interest rates to zero. I predicted the only outcome would be higher inflation in all hard assets.

Ok, the government realized it must do the “right thing” and raise rates. But they also RAISED their spending even more! A vicious circle. Inflation will come back with a vengeance.

Guru Answered on May 11, 2023.
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