Inflation - The Causes, Consequences And Beneficiaries

VANCOUVER: The Bank of Canada last week raised its interest rate to combat inflation, which has reached levels not seen in decades, and yet the causes, consequences—and crucially, the beneficiaries—of inflation remain largely unknown to many Canadians, argues a new study released by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank.

“It’s hard to overstate the economic effects of today’s higher inflation on Canadians across the country, but because inflation has been relatively low and stable for more than 30 years, most Canadians don’t understand the basics of the issue,” said Steven Globerman, professor emeritus at plans designed to bring depleted populations out of the “critical zone.”

In particular, it must set a target for stock rebuilding, a timeline by which it will be achieved and the actions that will be required. The regulations add new levels of transparency by requiring the Minister to publish any decision to extend timelines to create a plan, and any decision not to set a timeline for meeting rebuilding objectives.

Significantly, any fishing allowed while a plan is being developed must be consistent with growing the stock out of the critical zone.

Western Washington University, resident scholar at the Fraser Institute and author of A Primer on Inflation.

Since 1991, the Bank of Canada kept the annual rate of inflation at around 2 per cent, but in February 2022, the inflation rate hit 5.7 per cent and will likely continue to climb. In an effort to combat higher inflation, the Bank of Canada raised its policy interest rate by 0.5 percentage points on Wednesday.

Some common questions.

What is inflation?

Simply put, inflation occurs when the average price of goods and services increases.

What triggers inflation?

In 2019, the government amended the Fisheries Act to restore protections lost under previous governments and created new provisions requiring rebuilding plans for depleted fish stocks.

The regulations released last week outline the elements required in a rebuilding plan and to which fish stocks they apply. Thirty stocks are listed in the regulations, including 16 in the critical zone.

The government now has 24 months to create rebuilding plans for them, with an additional 12 months if required. Oceana is calling on the Minister to list all remaining stocks as quickly causes of higher inflation including the Bank of Canada’s recent penchant for financing government spending by printing more money—when there’s more money in the economy, but the same level of goods and services, the price of those goods and services increases.

Who suffers from inflation?

When average prices rise (food, gasoline, etc.) Canadian families must pay more or reduce their consumption. And crucially, if inflation rises faster than incomes, living standards decline.

Who benefits from inflation?

as possible, so the law applies equally to all fish populations.

”Many stocks have been severely depleted and in need of rebuilding for years or even decades. The government has published comprehensive guidance on how rebuilding plans should be written.

"Now that the first set of stocks has been listed under the regulations, we look forward to the development of clear, strong rebuilding plans that put these fish populations on the path to renewed abundance,” added Laughren.

In the past few months, Fisheries Minister Joyce Murray has value of money effectively declines—as does the value of debt. When the value of debt declines, the cost of debt interest payments also essentially declines. Second, inflation tends to increase the nominal value of assets such as real estate, which increases the capital gains tax liabilities of Canadians who sell those assets, thereby pushing some Canadians into higher tax brackets. Consequently, government tax revenues will increase even though the “real” incomes and wealth of most Canadians may remain constant or even decrease.

Why would the Bank of Canada—or any central bank— raise its interest rate?

its interest rate, it affects other interest rates in the economy (mortgage lending, for example). Typically, higher interest rates prompt more saving, less borrowing and less spending.

When spending on goods and services declines, sellers of goods and services (grocery stores, for example) lower prices—or at least increase prices more slowly—to encourage consumers to buy. As such, the rate of inflation declines. “Clearly, inflation conditions are much worse than many experts predicted at the beginning of the pandemic and the Bank of Canada believes it’s time for a more aggressive monetary policy,” Globerman said.

- (GLOBE NEWSWIRE)