Regardless of our opinion of America, North American history is such that America was very unique in its origins and its subsequent journey from then to now. As North America was being settled, the were no other locations on our globe at the time that possessed such a wide range of geography and climate while at the same time being (relatively) sparsely populated. With the exception of Quebec, the area that become Canada evolved directly from the British political system and to this day is tightly connected to it. America however had both the British system (with some French, Dutch and Spanish thrown in for good measure) and a system that was conceived and implemented from the ground up after the revolutionary war of 1775–1783. The post revolution political system was shaped by libertarian ideals and no other country in our recent history has been formed in this manner. Lastly, there is huge volume of information and data on which to base ideas, examples and arguments which is also fairly easy to obtain.
Sharing the globe's longest undefended border and a trade relationship that totalled $627B in 2016 means that very often events south of the 49th have a spill over effect north so it's important for Canadians to keep an eye on and at least have a basic understanding of American perspective.
With the (minor in this context) exception of some of the mechanix of how this all works, the $86B Canadian relief package, that is, $86,000,000,000, will have the same basic effects and results as what I describe below. My generation's great grandchildren will still be paying for this.
US Headline today: "Coronavirus economic updates: Record 3.28 million people file for unemployment"
This number is up 3 million over the previous week and this after only the first week of the state enforced shutdown. To help put it into perspective, the combined population of Manitoba, Saskatchewan and Nova Scotia is 3.3 million,
Here's how humanity, the American taxpayer in this case, is bought off and then screwed to the wall:
"Treasury Secretary Steven Mnuchin, in one of the first reactions from the Trump administration to historic jobless numbers released Thursday, in a phone interview this morning with CNBC, called them "not relevant" because, he said, the economic package under consideration in Congress now will help those put out of work, and in the long-term, people will be rehired."
So first we have someone, Mnuchin, claiming to be in/an authority. We in turn will not be as critical towards his words as we should be. He plants the "not relevant" so readers will now feel a little more at ease overall but also a little more receptive to what he has to say because of it. Then he drops the hammer which sounds oh so good, saved!, now we can all go back to eating dinner knowing dear leaders have once again saved the day.
Not so fast boy wanker, let's look a little closer shall we. The US doesn't have $2 trillion, that is, $2,000,000,000,000, and is also currently running a projected $1.1 trillion dollar deficit for 2020. This 'economic package' money then has to be created out of nothing. The federal reserve will purchase US government bonds - paper - and exchange it for digits on a computer screen. It also means that the US taxpayer is on the hook for this new debt and its interest. The 16th Amendment of the constitution is a collateral of sorts for these shenanigans.
Next, and aside from a proportionately small amount of funds going directly to US citizens (essentially giving them their money back but now with debt interest attached to it), a large majority of this money will reach the banking sector first, another group responsible for the economic disaster currently unfolding. This in turn allows banks, through that old black magic trick of fractional reserve banking, to turn this money into a WHOLE lot more: $10 for $1 deposited, also backed by nothing. This new money is in the form of loans in turn generating huge interest revenues. The original relief money that is handed out interest free creates new money at the banking level by lending it out to businesses and consumers, at interest of course, once again burning the very folks whose money this was in the first place!
Counterfeiting and grift is what we would call it, banking and lending is what they call it.
By the time this so called relief money hits the streets, the money supply has been radically inflated resulting in the purchasing power of it being diminished greatly by the resulting increase in the price of the very goods and services folks were struggling to acquire in the first place. So now not only are they essentially right where they started from, there is an additional massive tax burden added to pay for it all.
But it doesn't stop there. The inflated money supply also has a very detrimental affect on retirement savings AKA the hidden tax. When the dollars were put away/invested for retirement, they were done at a particular purchasing power level, for example, at time X, $1 was put away for retirement and could also buy 1 apple. Between this time and retirement, interest was earned on the deposited dollar, let's say $0.50, so now the account has $1.50 upon retirement. Due to inflation of money supplies by central banks, meaning a lot more dollars in circulation, meaning folks will be prepared to pay more for goods and services, prices will increase. Our $1 apple now costs $1.60 to purchase for example thereby wiping out any interest gain and dipping $0.10 into the principal, limiting future interest earnings. Through this mechanism, a retirement fund that was properly planned at time X to last until time Y (usually death) essentially gets whittled away as time goes on with a real potential to be depleted before death.
Guess what though? It only tends to happen at the you and I level. When the new money first hits the top tier, its effects have not yet filtered through so the buying power at this point has not been reduced.
Let's look at a major effect this bailout money has but from a different angle. Before the pitchforks and torches are brought out again, I am a compassionate empathetic individual so am fully on board with the idea that our compassion is one of the major separators between us and the general animal kingdom. The part of compassion that I refer to here is humanity's desire to keep/nurture our weak, infirm and genetically damaged. But I'm also a geek, meaning logic and pragmatism, which in turn forces me to consider the hard cold reality of nature and using a representative name: 'Mother Nature' does not keep her weak, it's survival of the fittest. It's this very mechanism that ensures the survival of entire species; it truly is nature's way and a reality of our existence.
What humanity needs to do, but hasn't as of yet, is learn to strike a balance between these two axioms. If done right, we can get pretty close to having our collective cake and eating it too, complete with money hidden in it like days of old. While working hard to ensure the development of a set of products and services that allow those (this would include charitable organizations as well for example) who wish to embark upon the nurturing of those not able to do so for themselves while not forcing others to if they so choose, we must also stop being responsible for the failure and/or lack of foresight of others. Doing this turns entire societies into dependants on some thing or individual, often government which is just the way that crowd loves things, while in turn forfeiting liberty. This dependency also makes us 'soft', that is, ill-equipped to deal with our personal problems, societal problems and environment, all of which can be changing and hostile at any time.
ANY business, service, what have you, that is failing for whatever reason, save one, and/or has not got a plan B needs to face the consequences of those choices/actions, ultimately going out of business if need be, regardless of size and scope. This ensures survival of the fittest while at the time ensuring that the goods and services brought to market are of the best quality, are in desire and are produced in a manner that meets the standards of the consumer.
The one exception is actually the rub and the problem: government. When the state mandates closure, this is in no way connected to how a business is being operated. Closure, as we're about to see with each turn of the calendar page, has a very detrimental effect, particularly on the small and medium business tier. When these businesses are driven from the market, the larger (multinational) corporations tend to step in. Unfortunately for us however, this also then means:
less competition in the market place + inefficiencies inherent with this tier = higher prices/lower quality/lower selection
- As of 2017, small businesses employed 8.3 million individuals in Canada, or 69.7 percent of the total private labour force. By comparison, medium-sized businesses employed 2.4 million individuals (19.9 percent of the private labour force) and large businesses employed 1.2 million individuals (10.4 percent of the private labour force).
- Between 2013 and 2017, small businesses were responsible for the majority (67.5 percent) of net employment growth,Footnote3 which increased by approximately 640,000 jobs. Medium-sized businesses contributed 17.8 percent of this net employment growth and large businesses contributed 14.7 percent.