Government is Making Us Poor
Commentary
We all know that inflationary pressures affect our families and are much worse than the government would have us believe. The International Monetary Fund agrees and has warned about optimistic estimates for 2023. They state that conditions will likely be much worse than in 2022. That hurts, and below from Sustainable Circular Economy, we provide some insight into the impact of government on all of us.
The statistic shows the average inflation rate in Canada from 1987 to 2021, with projections up until 2027. The inflation rate is calculated using the price increase of a defined product basket. This product basket contains products and services, on which the average consumer spends money throughout the year. They include expenses for groceries, clothes, rent, power, telecommunications, recreational activities and raw materials (e.g. gas, oil), as well as federal fees and taxes[1]
Since 2019, we have lost in the range of $5,000 in purchasing power. If you make $100,000 per year, you have 5% less. At $60,000 per year, 8.3% less, and if you are one of those hard-working restaurant cooks or servers, you have lost almost 17%. In 2023, another $1,200 is coming off your pay.
Remember that the impact of inflation is cumulative. An example. Start at "0” and add 5% inflation; we are at 5%. Add another 5%, and now it is 10%. Have a reduction of 2% - everyone cheer - but wait a minute; We are at 8% when before we were at "0". Is that such a good deal? Prices are still 8% higher, and I don't think your wage would have caught up, and I doubt it ever will. We are headed to the poor house, and I have yet to start to discuss the carbon tax and other negative impacts.
If anyone tries to sell you on a lowering inflation rate, they are pretty good at selling snake oil too. Any increase is cumulative and will continue to erode our standard of living, which may be the government’s intention. I will write about this in my next article.
Whose Standardof Living?
The middle class, of course. Have you ever seen the “Bosos” of the world get hurt by inflation? They may lose money on the stock market, but that is their play money.
For 2023, the economic impoverishment will continue, if not get worse. We have the 14-cent carbon tax and 13-cent clean fuel tax coming in. That is a 17% increase based on the price I paid for gas today, which will have a massive impact on our economy. Everything touches a truck, plane, boat, or train - all using gas. Someone must pay those extra costs, and guess who? Higher prices, higher inflation. We pay.
Can we try something? Let's keep track and see where prices go. Each person who reads this take the first letter of their last name and pick something in the grocery store that begins with the same letter. Mark down the price, keep it safe and send it to me at wayne@damndiabetes.ca. I will tabulate the information and be ready for the next round.
If you are up to it, I will send a note every three months to check prices. Let's see how many people we can get involved with this.
Government Policies
That sounds so clinical and so correct while our standard of living is being decimated. The government in 2015 said that the top 1% of earners would pay - one of the biggest lies foisted on us. Then there was the promise to balance the budget. The debt has ballooned from $765 billion to $1.2 trillion, an increase of 57%, and we have the carbon tax heading to $170 per MT over the next seven years.
That is an average annual increase of 15% per year, which will have a cumulative impact of 40% over eight years. Does anyone want to guess what that means? Yup, if you are making a wage of $100,000 per year, your purchasing power (not taking other taxes, etc., into account) will be $60,000. If you made $60,000 in 2022, in 2030, you would have the equivalent of $43,000 to support your family. I will not talk about the poor person making $30,000 yearly but all those thousands of people we rely on daily to make our lives a little bit easier like the least well off will be hit the hardest.
This destruction of middle-class wages comes with the government saying house prices are too high. Could it be that they have just squandered our purchasing power?
Then there is the edict to switch to EVs. Don't get me wrong, I am a proponent of doing the world a world of good regarding climate change, but we will not do a world of good by driving the middle class over the brink.
The whole weight of the impact of the government policies has yet to come home to roost. Just wait until we have the wave of people who must renew their mortgages facing a monthly payment increase of $1,000 or more per month.
If you still need to calculate your new payments, I recommend you use one of the free online mortgage calculators to see what you will face. It is better to be prepared beforehand. At least you may have some options from which to choose.
I Will Leave it at That.
It is true. The only thing certain in life is death and taxes. We are being taxed to death, and it will only get worse.
When we demand more from the government - like $10 daycare, who pays the rest.? We all do in the form of government printing more money and higher taxes—a double whammy for all of us.
At this point, I do not know how we get out of this mess without much pain. We are at the tip of the iceberg for challenges that will force much greater food insecurity, energy poverty, health and mental health problems and the destruction of thousands of families.
Some are going to say I am an alarmist. I was right about the forest industry in British Columbia with my prediction of 1996, and I don't think I am wrong with this either.We collectively have two choices:
1. Shoot the messenger and ignore the problem and the challenges that face us, from climate change and global warming to the impact of inflation on our lives.
2. Begin the discussion towards understanding and solutions so that we can genuinely say we are doing the world a world of good for all of us.
I am saddened because I can envision what the impact will be on my grandkids if we do not change all of this - and all I can say is there is a better way than where we are headed today.
Best wishes and kind regards
Sustainable Circular Economy
Vancouver, Canada
Wayne Drury is CEO of Sustainable Circular Economy, a boutique firm in Vancouver, Canada, helping businesses and First Nation communities to arrive at environmental solutions that are good for the people and the planet and are sustainable based upon a circular economy of reuse, repurpose, and recycle.
[1] Statista (09 11 22). Canada: Inflation rate from 1987 to 2027 https://www.statista.com/statistics/271247/inflation-rate-in-canada/
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