On October 5, 2021 United Kingdom Prime Minister Boris Johnson famously said “inflation fears” were unfounded. A couple of weeks earlier Canadian Prime Minister Justin Trudeau ignored economists’ warnings that his spending plans could fuel inflation saying “you’ll forgive me if I don’t think about monetary policy” as his government approved over $70 billion of new spending. Just this month, United States president Joe Biden ignored the 8.5% reported rate of inflation in that country saying inflation was up “hardly at all”.
Voters in these three Western democracies chose these leaders. What were they thinking?
The lack of any understanding of economics plagues the people voters have chosen to leader their countries beyond imagination. In England, interest rates on 10-year “gilts” have risen ten-fold over a year. When rates rise, the trading price of the debt instrument falls. The bond portfolios of banks and pension funds must be a sight.
Voters are led to believe central banks can control both inflation and interest rates, and in Canada that governments can control the weather through taxes. But reality is setting in. Interest rates are set by borrowers who can simply refuse to buy bonds at the government’s bond auctions and if central banks don’t buy the bonds needed to fund government’s rampant spending by “printing money” through the euphemistically called “quantitative easing” rates will rise as bond buyers become non-buyers.
The phenomenon of leaders of western democracies pursuing nonsensical policies is not more evident in any realm than “climate change” and the attack on fossil fuels based on the pretense that CO2 causes global warming. Trillions of dollars have been squandered on so-called “renewables” which have been an abject failure as demand for fossil fuels keep rising, but the fossil fuel industry is not deluded and has reacted to the the attack by simply husbanding their capital, repaying debt and increasing dividends and share repurchases. The decision not to invest makes sense when the climate nutters we elected say they want to put and end to the use of fossil fuels. Markets will teach those nutters that it is more likely a shortage of fossil fuels will put an end to their political careers as the global crisis their stupidity has created is felt by their citizens in their pocketbooks.
The progessive governments are getting their comeuppance a bit at a time. In England, Johnson has been sent packing and newly appointed Prime Minister Liz Truss is having none of the “tax and spend” policies that have fueled inflation and immediately announced tax cuts and an end to the “green” policies she inherited, stating she would encourage increased fossil fuel production from the North Sea and end the ban on “fracking” that has hamstrung British natural gas output and made the country dependent on imports from Russia.
In Italy, voters overwhelmingly elected Giorgia Meloni Prime Minister last week, a stark departure from the progressive government of Mario Draghi. Meloni’s conservative policies were immediated attacked as “fascist”, the left-wing trope for any conservative coming to power. Meloni’s policy slogan of “God, Country, Family” is hardly fascist but little more than common sense, and Italy’s voters have agreed. Meloni is unlikely to put up with more “green” nonsense and will instead focus on expanded use of nuclear to supplement natural gas.
Meloni has inherited the fruits of years of poor leadership by left-wing leaders resulting in the country’s 9.1% inflation rate and will have to stick-handle an economy saddled with enormous debts.
In Canada, Pierre Poilievre decidedly won the leadership of the Conservative Party and triggered an immediate attack by the Trudeau Liberals and main stream media who receive the bulk of their funding from the Liberal government. The anti-Poilievre propaganda isn’t working. All of the September Canadian polls for the next Canadian federal election have the Conservatives forming the next government of Canada.
What Boris Johnson, Joe Biden and Justin Trudeau share in common is an addiction to policies that don’t work driven by a nonsensical “climate change” theory so absurd it cannot stand up to even a superficial analysis based on the laws of physics, and a quasi-religious belief in “wokeness” characterized by identity politics and an absurd proposition that mankind has more than two “genders” at birth.
As inflation is fueled by the global energy shortage and central banks ratchet up interest rates (too little and too late) to try and contain the rising cost of living, markets are reacting just the way Adam Smith would expect. Shortages are driving up prices, not just of energy (which is a major contributor to the inflation picture) but also to food, transportation, and housing costs. The artifically low rates of the past decade under progressive governments drove homes out of reach for most young people, and the rise in rates is killing their ability to buy a home driving them to rent. As Adam Smith would have predicted, rental rates are surging higher despite rent controls in major Canadian markets. The average rent in the Greater Toronto Area (GTA) market is up 21% year over year.
In United States, voters have a kick a the cat in the November mid-terms, now only weeks away. It will be interesting to see how badly the Democrats get scarred by their record of profligate spending, soaring inflation, rising interest rates and porous Southern border as Americans react to the silliness in public schools promoting gender nonsense and critical race theory and parents have had enough. American polls are themselves biased by the ideology of the pollsters and have a poor record generally, but the growing evidence points to Republican control of the House of Representatives and a toss up for control of the Senate. If that happens, Biden will be a lame duck for the last two years of his tenure and perhaps will sail off into the sunset since most Democrats don’t support him for the 2024 election.
This may the year where free markets demonstrate their power and left-wing politicians face the music of a flawed belief they can control markets. Voters who can’t pay for food, clothing, gasoline or energy to heat their homes don’t generally vote for the incumbents who visited the problems on them.
Let's hope green idiocy in Western countries comes to an end. Let's hope Conservatives start to pursue conservative agendas again, instead of trying to please the Left-Green.
How do we get your articles onto MSM every day? In this country & USA. People need to hear this.