Great and timely article Paul! There are, of course, differences in US and Canadian tools available but "Don't gamble with your money. Invest wisely" holds true no matter where in the world readers might be! Great mantra.
Your medical and healthcare point is a tough one to read as an American but unfortunatly true. Ugh.
First, let me thank you for writing a piece that is VERY RELEVANT to how we are living our lives. Whereas some people have a penchant for ruminating on lots of dubious, airy-fairy, ill-defined feelings, I can always count on you to bring me back to earth.
One issue, re inflation, that has bugged me for years:
1) You mentioned that high interest rates are a favorite tool for fighting inflation. You noted, quite correctly, that by cooling off the economy, they can reduce inflation. They will induce people to save instead of spending with abandon.
HOWEVER, I think that sometimes high interest rates are employed to fight inflation that was not caused by overheating.
EXAMPLE: In 1980, US inflation spiked to very severe levels. The Fed Reserve hiked the discount rate to a dizzying degree.
The consequences were so severe that in the second quarter of 1980, I read that the GNP (a precursor to the GDP) declined at an annual rate of 8.2 percent (But it's hard for me to believe that it was that bad; maybe it was a typo in an article I had read)
However, the inflation was not caused by overheating.
THE INFLATION WAS CAUSED BY IRAN'S DRAMATIC INCREASE IN OIL PRICES IN 1979. Essentially, we got a cure for inflation caused by a malady we did not have. The economy was not overheating, and high interest rates were an unfair imposition on Americans (which for numerous reasons spilled over into Canada and the developed world in general) . The consequence: A very painful contraction in the US economy until, about, the end of 1982.
Great and timely article Paul! There are, of course, differences in US and Canadian tools available but "Don't gamble with your money. Invest wisely" holds true no matter where in the world readers might be! Great mantra.
Your medical and healthcare point is a tough one to read as an American but unfortunatly true. Ugh.
First, let me thank you for writing a piece that is VERY RELEVANT to how we are living our lives. Whereas some people have a penchant for ruminating on lots of dubious, airy-fairy, ill-defined feelings, I can always count on you to bring me back to earth.
One issue, re inflation, that has bugged me for years:
1) You mentioned that high interest rates are a favorite tool for fighting inflation. You noted, quite correctly, that by cooling off the economy, they can reduce inflation. They will induce people to save instead of spending with abandon.
HOWEVER, I think that sometimes high interest rates are employed to fight inflation that was not caused by overheating.
EXAMPLE: In 1980, US inflation spiked to very severe levels. The Fed Reserve hiked the discount rate to a dizzying degree.
The consequences were so severe that in the second quarter of 1980, I read that the GNP (a precursor to the GDP) declined at an annual rate of 8.2 percent (But it's hard for me to believe that it was that bad; maybe it was a typo in an article I had read)
However, the inflation was not caused by overheating.
THE INFLATION WAS CAUSED BY IRAN'S DRAMATIC INCREASE IN OIL PRICES IN 1979. Essentially, we got a cure for inflation caused by a malady we did not have. The economy was not overheating, and high interest rates were an unfair imposition on Americans (which for numerous reasons spilled over into Canada and the developed world in general) . The consequence: A very painful contraction in the US economy until, about, the end of 1982.
As usual, your history lessons make us all smarter. Thanks for reading, and commenting, David. I appreciate you!