New Federal Economic Strategy Could Benefit Canadians
September 26, 2024
It is time for a new federal economic strategy, writes Peter Watson.
Recent high interest rates have caused much hardship for many Canadians. It is time to consider other options.
Canada’s economic objective is to maintain steady growth while controlling inflation. That goal benefits us all and should remain.
The current and accepted strategy to reduce inflation is to reduce consumer spending and this is done by increasing interest rates.
Financially secure households might find high interest rates an inconvenience, however, for others it might be financial despair.
If the goal is to reduce spending to help lower inflation the government has a second option and that is to reduce its own spending. That shift would take some of the burden of lower spending off the shoulders of Canadians.
Therefore, the government would not have to raise the cost of borrowing as much as it does now. That would benefit us all and particularly those with lower incomes
A second idea is for Canada to have a balanced budget versus the current practice of our government spending more money than it collects in taxes.
That would help reduce our country’s excessive spending and therefore help control inflation. Government overspending is one of the causes of inflation.
These ideas have a major hurdle. Government needs to win elections to stay in power.
It would be a political challenge for the government to lower spending because voters tend to support governments that overspend. Our focus is on the short term. Overspend now and we enjoy additional benefits and don’t worry about our mounting debt.
It’s time to modify federal economic policy for the betterment of us all.
Peter Watson, of Watson Investments MBA, CFP®, R.F.P., CIM®, FCSI offers a weekly financial planning column, Dollars & Sense. He can be contacted through www.watsoninvestments.com
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