In the 1939 James Cagney and Humphrey Bogart film “The Roaring Twenties,”
the opening scene shows a lady buying her groceries at the local shop. When she sees that the price has increased, she has a shocked and bewildered look on her face. This is how most consumers, including myself, feel when we checkout our groceries.
On Saturday, I was with my dame at Dickie’s No Frills, which is one of the cheapest grocery stores in the Greater Toronto Area. As we were scurrying around the store, we noticed how everything has jumped in price within just one short week. A bag of carrots rose from $0.99 to $1.47, a bag of frozen vegetables skyrocketed from $1.25 to $2.29 and apples went from $0.67 the previous week to $0.97 (soon $1.27 next week most likely).
In recent months, the Bank of Canada head Mark Carney has published reports and held press conferences
where he states that the inflation rate is under control, and according to figures, he is correct (2.6 percent). If we know anything about a government agency it’s that the numbers are usually skewed, manipulated, fudged or just plain wrong.
He correctly has pointed out the extremely high debt levels
in this country. But how come he doesn’t realize the inflation threat that faces this country? Every country that maintains a fiat currency system inflates its money supply (I.E. creating money out of thin air). This is dangerous to any lower or middle class individual.
If one would approach Carney today and ask him about the inflation, he would deny that anything harmful is occurring. How is that people in Scarborough, Windsor, the inner cities, middle income groups and the poor know about it and the elites at city hall, provincial legislatures, the House of Commons and the Bank of Canada don’t know about it?
As famed Austrian Economist Henry Hazlitt explained it in his book, “Economics in One Lesson,”
inflation benefits Classes A and B, but people in Classes C and D are the ones to suffer. The freshly created money helps Class A and to a certain extent Class B. As the money goes through the system, C and D knows something is terribly wrong with its money – eventually B also receives the short end of the stick. The rise in prices is simply an effect of inflation.
If one were to measure prices of goods, services, oil and our day-to-day bills in terms of gold, you would see that the costs have remained flat or even fallen
No, this isn’t a diatribe for higher taxes, enhanced market regulations, more subsidies for farmers or persistent doomed-to-failure government interventionist monetary or economic policies (a repudiation of the aforementioned would be great, though). No, as an average Canadian, I do not have the solutions to our problems, unlike the Keynesians in Ottawa. Who knows what could be the answer to the issues facing our bank account? Could we, like world renowned Austrian Economist F.A. Hayek suggested, permit competing currencies? Or how about a commodity-backed currency, an idea similar to what another Austrian Economist Murray N. Rothbard put forth?
All what the average consumer knows is that the cost of living is soaring and their dollar purchases a nickel’s worth.
Indeed, the fiat currency experiment has failed and it is inevitable that the entire system will collapse. What will be in its place? If our esteemed public officials have any say in the matter, it could be a monetary system much worse.