Inflation as a tax on Canadians.

Most Canadians know that federal monetary policies can create inflation and reduce the purchasing power of the Canadian dollars they spend. There is more to this story.

ChatGPT explains…

I use this LLM AI tool because I know that it usually returns statements from government sources. It rarely offers information and commentary from the so-called Internet “fringe” sources. The “unofficial” sources are usually labelled as purveyors of “conspiracy theories”, “misinformation”, “disinformation”, “hate speech” and more. They are often censored, shadow-banned, discredited, etcetera.

Heaven only knows why our “superiors” don’t want us the think for ourselves. Did we somehow earn their distrust? Are we a nation of “tinfoil hat” wearers in their eyes?

The following ChatGPT response offers some insight into the affect of central banks’ “monetary” policies on inflation:

A central bank’s interest rate target can become an inflation “tax” on citizens if the bank sets the target rate too high or too low 1. If the target rate is set too high, it can lead to a decrease in the money supply, which can cause a recession and deflation 2. If the target rate is set too low, it can lead to an increase in the money supply, which can cause inflation 12. Inflation can be thought of as a tax on citizens because it reduces the purchasing power of their money 1.

Central banks use a variety of tools to manage inflation and maintain price stability. One of the most common tools is the target interest rate, which is used to guide monetary policy toward the desired economic outcomes 3. The target rate is an intermediate target that the bank can directly influence by its monetary policy and which it understands to be related to downstream economic performance 3. The target rate is used to gauge how much money and credit to add or withdraw from the financial system to achieve the desired economic outcome 3.

The Bank of Canada has kept its interest rates low in recent years to stimulate economic growth and employment 1. The bank has been using monetary policy to support the economy during the COVID-19 pandemic 2. The bank has also been trying to keep inflation within its target range of 1-3% 1.

According to the Bank of Canada’s website, the bank carries out monetary policy by influencing short-term interest rates. It does this by adjusting the target for the overnight rate on eight fixed dates each year 1. The bank uses a variety of tools to manage inflation and maintain price stability, including the target interest rate 1.

Sounds reasonable? Ya, right!

The Mystery of Banking by Murray Rothbard is a primer on banking that every citizen should read. An good alternative is What Has Government Done to our Money?

The “official” story about banking is a benign narrative that leads the reader to believe that our central banks are serving “the public interest” with a steady hand and a great deal of competence.

Rothbard provides different insights that reveal a monetary system that serves politicians and heads of public institutions with very little regard for citizens.

Deceit, Obfuscation, Misinformation and Slight of Hand.

If you are concerned about how the federal government steadily siphons evermore of your money in deceitful ways, you will also find this podcast episode interesting: "Double the Pain: How Inflation Increases Tax Burdens with Bill Robson and Alex Laurin" by The CDHI Podcast. Bill Robson argues that tax rate thresholds should be adjusted to inflation. As your income rises over time in response to inflation, your taxes increase as more of your earnings are pushed into the next highest tax bracket. If those tax brackets and the Basic Exemption were to be adjusted every year to correct for the rate of inflation, this TAX BRACKET CREEP would stop. You would not suffer from the progressive tax poverty that deepens from unadjusted “progressive taxation schedules”.

Some day, if this “progressive embezzlement” of personal earnings is not stopped, every Canadian will pay the top tax rate on nearly all earned income!

Headaches galore.

Of course, you will be expected to pay proportionally more of your earnings on taxes WHILE your purchasing power is proportionally lower.

To explain, suppose that your Canada dollar can purchase only 85 cents worth of goods in 2023 compared to 100 cents in 2020 because the accumulated inflation rate was 15% between those years.

The “big squeeze” is my name for this situation in which governments expect more tax revenues from your earned income even as the cost of living is ramping up from their inflationary monetary policies.

The pressure from this squeeze is enough to give every income-earning man, woman and employee seeing-eye dog a serious headache.

TIP: Don’t tell Big Pharma or else they will likely create a new crisis and “get rich quick” scheme based on some novel, experimental, EUA-approved headache medicine that’s completely “safe and effective”!