Quote:
Originally Posted by Enoch Root
I agree that inflation risks have grown significantly in the last 6 to 12 months, but that isn't what was brought up in this thread. Would slowing down the economy take some of the wind out of the sails of inflation? Sure. But slowing down the economy now, with high unemployment, and so many small businesses hurting due to Covid, would create many other problems.
Also, I think the current source of the increased inflation is commodity-based and scarcity-based, not due to over-heated economic activity.
|
A major issue was the even before covid hit, the central bank had ultra low interest rates. They were using these rates to disguise deficiencies in the economy. Consumer debt was already at a very dangerous level. Instead of biting the bullet, successive governments kicked the can down the road.
When covid hit, the government had little choice then to spend, but things should have been in a much better place prior to covid. A lot of the issues, imo, had to do with lack of proper regulation in the housing market. They kept interest rates low, to let "average Canadians" get into the market and avoid a crash following the initial investor driven inflation of the housing market.