Happy Monday Morning! As expected, the Bank of Canada maintained rates at 5% this past week. While Tiff pushed back on rate cut talk, he did leave us with some clues. “If the economy evolves broadly in line with the projection we published today, I expect future discussions will be about how long we maintain the policy rate at 5%.”
Inflation is and always has been the imposition of higher prices -- liabilities -- on society by those with the power to do so. The Fed, the BoC and other central banks to then signal the private sector banks to raise interest rates thereby imposing additional liabilities on society.
Milton Friedman was an idiot claiming inflation was always a growth in the money supply. I digress.
Both lead to the transfer of money -- a$$et$ -- to those imposing higher interest rates and prices. Their balance sheets then show increased equity while the balance sheets in most of society show lowered or even negative equity. That leads to a call for increasing the pay -- assets -- of those facing higher liabilities -- costs or prices.
Inflation is and always has been the imposition of higher prices -- liabilities -- on society by those with the power to do so. The Fed, the BoC and other central banks to then signal the private sector banks to raise interest rates thereby imposing additional liabilities on society.
Milton Friedman was an idiot claiming inflation was always a growth in the money supply. I digress.
Both lead to the transfer of money -- a$$et$ -- to those imposing higher interest rates and prices. Their balance sheets then show increased equity while the balance sheets in most of society show lowered or even negative equity. That leads to a call for increasing the pay -- assets -- of those facing higher liabilities -- costs or prices.
Assets minus liabilities equal assets.