The Monthly Government Analytics

Rebuilding the Canadian economy in the post-Covid era
Jack Mintz takes on the Keynesians

• Last week the newly appointed UK Prime Minister had to pivot.
Her proposed tax cuts sent the UK economy into a tailspin.
Yet, Canada’s PBO says tax cuts are the way to go.

• In 2021 the Bank of Canada had to pivot, like most central banks.
But its emphatic, its not going to pivot again.
Not until the policy rate is higher than the inflation rate.

• Former Governor David Dodge says we should expect higher interest rates “permanently”, holding at 4% well into 2024.

• As part of what has become his annual review on The Monthly Jack Mintz will be joining Peter to help us figure it all out…

Dr. Mintz is currently the President’s Fellow in the School of Public Policy at the University of Calgary. He served as University of Calgary’s Palmer Chair and Director from 2008 to June 2015, and currently serves on the boards of Imperial Oil Limited and Alberta Health Services. He was a professor in economics at both University of Toronto and Queen’s University. Dr. Mintz became a member of the Order of Canada in 2015.

Rebuilding the Canadian Economy in the post-Covid Era: Supply Management, Corruption and Russia

Bill Browder
NY Times Best Selling Author
Global Fund Manager
Magnitsky Law initiator

Hon. Peter Kent, host

Thursday, September 15, 2022

Sergei Magnitsky was a 37-year-old tax lawyer and auditor, married, having two of the most adorable children when he was brutally beaten to death in a cold Russian jail cell on November 9, 2010 – all because he uncovered a $230 billion money laundering scheme – orchestrated by the same ruthless dictator currently holding the global economy hostage, Vladimir Putin.

What his former client Bill Browder can’t understand is why countries like Canada let Putin and his thugs hide their stolen money here. A point underscored by Justice Austin Cullen last week when he tabled his report in Victoria, calling urgently for a new anti-money-laundering czar.

Browder knows the only way to destabilize Putin is to take away his power – power that comes from the billions stolen from Russian citizens.

So, its frustrating for Browder to witness a country like Canada – that tracks and settles $539 billion worth of financial data sets each and every day – not having the political hutzpah to bring these thugs to trial especially with what’s happening in Ukraine.

Who better to have a conversation about measuring the intensity of political will in a war zone, than with someone who’s been to war both as an award-winning journalist and a politician, the Hon. Peter Kent.

Rebuilding the Canadian economy in the post-Covid era
Will the central banks be able to withstand the heat?
 ·         At the recent Jackson Hole economic policy symposium Jerome Powell, the head of the US central bank, spent 8-minutes making it abundantly clear he’s going to get inflation under control. A speech that cost some of America’s richest citizens, almost $10 billion a minute as the S&P 500 index dropped 6.5 percent. 
 ·        Today, the Bank of Canada stuck to a similar narrative jacking up the policy rate another 0.75 per cent to 3.25 per cent.
 11:00 a.m  Monday
September 12, 2022
·        Commenting on the symposium, former Director of the London School of Economics, Sir Howard Davies, told Bloomberg Surveillance he’s concerned about central banks losing their independence. “Somehow we have to find a manageable pathway down to a lower level of inflation which politicians can support.”
 ·        On Monday, Chris Ragan, the founding director of McGill’s Max Bell School of Public Policy, is going to help us figure all this out. Dr. Ragan is one of Canada’s most respected monetary policy theorists.

Rebuilding the Canadian Economy in the post-Covid Era - What's with China?

Hon. Peter Kent, moderator

• Global inflation is higher, reflecting the impact of the Russian invasion of Ukraine, ongoing supply constraints, and strong demand, says one Bank of Canada news release after another… often with a simple reference to China and the restrictive measures being taken to contain COVID-19 outbreaks.

• But wait, there’s now the Nancy Pelosi’s visit to Taiwan… where supply chain management just got a lot more complicated writes the Huffington Post (link), “China’s military threats have driven concerns of a new crisis in the 140km-wide Taiwan Strait that could roil global markets and supply chains.”

• Who better to ask what the heck is going on in China than former Ambassador (2009-2012) David Mulroney? How popular is President Xi Jinping right now? What impact is all this having on rebuilding the Canadian economy in the post-Covid era? How do you account for it going forward?

• A career Foreign Service officer, Mr. Mulroney had a series of senior appointments in the Foreign Affairs Department in Ottawa, including 4 years as Canada’s Senior Official for Asia Pacific Cooperation (APEC). He served on overseas assignments in Taipei, Kuala Lumpur, Shanghai and Seoul. From 1995 to 1998 he was Executive Director of the Canada-China Business Council.

How did the Bank of Canada get inflation so wrong? One explanation for the misjudgment – like many central banks – is that they took their eye off of tightly managing the money supply.  With inflation now well above the 2% target, last week’s whopping 1% policy rate increase – not seen since the 08/09 Great Financial Crisis – caught most of us off-guard.  Tom Keene, with Bloomberg Surveillance is calling it the biggest shock of the week, leading to the opening of the flood gates.
 Steve Ambler and Jeremy Kronick took a look at the data (link). They found evidence that there is still a valid and reliable relationship between the long-term trend in money supply growth and inflation – arguing (link) that unprecedented money growth during the pandemic is still fueling high inflation.