Friday Night Lights

I'm like a teenage football player in Texas right now: jacked up, trash talking and looking for a target for this linebacker. Ah, there he is.

Apparently, some don't believe that inflation should be the primary concern of the central banking system.

The Canadian Labour Congress has added its voice to those calling for the Bank of Canada to match the interest rate cut made earlier this week in the U.S.

CLC president Ken Georgetti said the role of Canada's central bank isn't confined to fighting inflation.

National Bank Financial issued a call for a trim, noting that the loonie has gained 16 per cent against the U.S. buck this year and 5.5 per cent in just a month.

"In our opinion, the [Bank of Canada] should release some pressure and lower rates on Oct. 16."

Let me say two things: the bank's role isn't confined to inflation fighting; and the bank's role doesn't include bailing out corporations that have uncompetitive workforces. That statement is only one of the two things I have to say. The other is this: lower rates will not have the effect of "releasing pressure." The banks artificially low interest rates are partly responsible for why we are where we are today. Do the right thing Dodge and fix this mess.

Inflation is, was and has been much higher than the BoC reports through the CPI. Don't take my word for it. Take Paul's.

Yes, we are shortchanged

The latest inflation numbers have been released by the U.S. Commerce Department and the annual level of consumer price inflation was 1.9 per cent.

Canadian statistics are essentially the same. Astonishingly, the media rhymes off these numbers as if they are legitimate.

Don’t these reporters buy food and gasoline, pay assorted taxes and such?

In the early 1990s, the U.S. government realized it had a problem with rising entitlement costs for government social and pension programs.

These payments were indexed to the annual inflation rate. With inflation on the rise, it meant these costs would drive government deficits into uncharted territory. To keep government deficits under control it would be necessary to bring entitlement costs down. Hence, it was necessary to bring inflation down.
The solution: change the way inflation is measured.

A federal commission was appointed to change and re-calculate the Consumer Price Index. Several tricks managed to reduce these increases.

Substitution: if a particular item became too expensive, substitute a cheaper alternative — remove steak, add hamburger.

Hedonics: adjust the prices of goods as a result of the increased innovation and pleasure a consumer derives from a product. Benefits of a new plasma television would reduce the price of a basic tube TV by say, half. It drives down the index but if one wanted a new TV, one must still pay the going rate of the new standard plasma.

Seasonal adjustments, the core rate and other deceptions, spin a tall tale.

With true inflation running closer to 10 per cent, is your income keeping up? On a fixed income, relying on the CPP? Preserving capital in money market funds? A three per cent return means a loss of 6-7 percent a year.

At the lower end of the wage scale, if you earned $10/hour last year, it’s close to $9 this year and heading to $8 the next.

Meantime, MLAs are getting for a net a pay raise of 29 per cent and the premier a 53 per cent increase.

If you’re feeling a little shortchanged, it’s because you are.

Paul Stuart
Parksville

Listen to the union bosses and drop the interest rates Dodge. Devalue the currency so manufacturing jobs can be saved and those unfortunate souls who should retrain with the ample EI dollars available to them to do so don't have to. Who cares about the rest of us? As for the working poor, we should follow the same left-wing "economic" thinking and just give everyone on minimum wage a raise. (SARCASM INTENDED)

I've got a novel idea. Let's raise rates. Let's tighten lending rules. Let's pay off some debt. Let's save some money. Let's invest in sectors that can provide long-term jobs that don't require a cheap currency. Let's, I don't know, take some freakin' financial responsibility people.