Here we go again. Experiencing a significant public policy failure, in this case inflation, we must decide whether to face it squarely or suppress impudent…
Thus far, there seems to be a significant trend toward piling on Conservative leadership candidate Pierre Poilievre as a bitcoin-touting hick for doubting that the Bank of Canada is full of wizards who can easily deliver full employment, minimal inflation and cheap mortgages as soon as they give their crystal ball a good whack. But at the risk of reigniting the wrath formerly directed at the trucker’s convoy, I want to focus on the problem not the critic.
Like epidemiologists and climate alarmists, central bank economists rely heavily on razzle-dazzle computer models that don’t work. It’s been over 20 years since I first borrowed the jibe that it’s “like the drunk who dropped his key by his door but is searching under the streetlamp because the light is better there: Keynesian theory permits sophisticated mathematical modelling; Austrian economics just tells you to leave well enough alone and hope for the best.
Including Keynes, like a modern Robin Hood splitting one arrow with another, arguing that inflation and unemployment were inherently linked, so nailing one meant nailing both. Which Macklem channelled when asked whether raising interest rates to tame inflation might cause a recession, saying, “I won’t pretend it isn’t delicate.” But what if it’s not?Article content
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