It turns out endless spending does come with a hangover: soaring interest rates.
It turns out that logic still applies. You can’t print and borrow hundreds of billions of dollars of new money and expect that it will hold its value.
It’s not only hardworking taxpayers who are feeling the pinch. With interest rates rising, governments are also feeling the squeeze. Unfortunately, politicians, unlike average Ontario families, can run endless deficits and leave the consequences to future generations.Article content According to the finance ministry, for every 1% interest rate hike from the Bank of Canada, interest charges on the provincial debt will rise by about $650 million. Because the Bank of Canada has increased interest rates from 0.5% to 4.25% in just the last 10 months, debt interest payments this year will rise by some $2.4 billion.
To do so would be extremely reckless. Ontario is poised to spend at least $14.5 billion on debt interest next year. Hardworking taxpayers can thank the careless policies adopted by Ontario’s last few governments for that high figure. But it’s only going to get worse.
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