Maxime Bernier Jumps the Shark
Through a series of speeches and Financial Post op-eds, former cabinet minister Maxime Bernier has been setting out an uncompromising right-wing agenda. He had Andrew Coyne applauding his proposal to freezeÂ public spending. He had Stephen Gordon tweeting in support of his proposal to eliminate corporate taxes.
But his latest proposal has already been rebuked by Gordon and is unlikely to garnerÂ Coyneâ€™s endorsement. BernierÂ thinks that the Bank of Canada should never expand the money supply. (Following todayâ€™s pro-deflation speech, his pro-deflation op-ed appeared on theÂ Postâ€™s website this evening and looks set to be printed tomorrow.)
The Financial Post has periodically run op-eds by Martin Masse, a former advisor to Bernier, calling for the abolition of central banking. I always wondered whether Bernier shared Masseâ€™s perspective on monetary policy. NowÂ we know: â€œDeflation is not a threat to our prosperity. . . . I believe that within a few years, we will need to hold a serious debate about returning to the gold standard.â€
Maxime Bernier is MP for Beauce, a riding with a long history of Social Credit (or CrÃ©ditiste) popularity. Tinkering with monetary policy is not a new element of the political discourse over there.
Could be something in the water…
Last August, the governor of the Bank of Canada, Mark Carney, said: â€œThe single most direct contribution that monetary policy can make to sound economic performance is to provide our citizens with confidence that their money will retain its purchasing power.â€
A 0% inflation target would achieve precisely this and send a powerful message that inflation in itself is wrong and that debasing the currency may bring some short-term gain, but always brings long-term pain.
When I first saw the headline of Bernier’s op-ed, I thought it might be an intelligent discussion of monetary policy and a reasonable argument against any inflation (I’m disposed to disagree, but it doesn’t mean the discussion is bad).
Sadly, that was not the case.
Max Bernier can also meditate while hung over! Oh Lord I beseech you!
“The reason why overall prices go up is not because businesses are greedy, or because wages go up, or because the price of oil goes up.”
Yes! thats it, never factor in the Oil prices for calculating inflation. Ironically, it is one of the most anecdotaly cited reasons for the rising costs. I have been watching for some time how sheltered the Oil Industry is from government and economic institutions to escape any scrutiny from causing havoc almost single handedly to economy. Bernier too here is Exonerating the Oil price fluctuations in impacting almost prices universally across the board.
Then there is another threat of the rising security costs. While the governments in the West make such a fuss about Security I have lost track of the number of times I have read the government officials leaving Confidential Documents in the subway or in a girlfriends apartment. Then there is the paradox of the $1.1 billion security costs for three day event. Is there any chance there will be a discussion about the impact of Oil prices and the Security costs on inflation?
I doubt it.
Bernier says: “I may be a dreamer, but I think monetary economics should be a hot topic”
I am not convinced. I wonder if this op-ed piece is to do with ending the Stimulus and sell the concept that curtailing money supply will keep inflation down and Deflation is good.
Brandon, although I would oppose squeezing the inflation target down to 0%, there is a credible case to be made for doing so. At least prior to the financial crisis, most Bank of Canada staff seemed inclined to move in that direction.
But Bernier goes way beyond that. He proposes to hold the money supply constant, forcing deflation as (or if) the economy grows.
By the way, on last nightâ€™s At Issue panel, Coyne called Bernierâ€™s monetary proposal â€œwacko.â€
@ erik I know what he calling for, it would be reminiscent of the US industrial period, during the 1800s while during that revolution, prices fell for everything, they lived in constant deflation.
The average cost of living for familiy was non existent, that one bread winner could clothe, feed, and educate up to 8 children on very little wealth. Which was directly lated to are purchasing power that we lost over 10, 20, 30 years. Spending time with their kids as opossed as the parents all be gone, and kids always uptown etc, that we seem to accept now as normal. That feat is seemingly impossible now.
Yet now the US imports more then exports, and is the largest debtors of our known world, on a FIAT currency. Something is wrong.
Gold standard or something like it will be debated in the future, I honestly see that as a possibility.
However is the psycotic importance of the US spending trillions. This is untested waters in area where debtor nations lack role models. If its fails for whatever reason, keynesian advocates, and or ambitious spenders will be hit the hardest blow ever. However if it works, which I cringe is how, if the US can do it, we can do it, were socialists come on!!! world unite!!!