Economy, Inflation, Travel woes, World politics - the hot political issues this fall.

by Maj (ret'd) CORNELIU E. CHISU, CD, PMSC, FEC, CET, P. Eng. Former Member of Parliament Pickering-Scarborough East As parliament is due to start its fall session on September 19, the Liberals and Conservatives are headed for a showdown in Ottawa over the hottest political files of the summer. Both parties are making plans to prioritize issues like economy, inflation, world politics and travel woes. After a summer of scrutiny over chaos at airports and passport offices, continued economic pressure on families due to inflation and the subsequent rising cost of living, and the Ukraine Russia war which drags on, it is expected to be an ugly and edgy House of Commons this fall. I anticipate this to be the case especially if Conservative leadership frontrunner Pierre Poilievre wins on Sept. 10. The long-time MP who always does his homework, may be best placed to come out on top once all ballots are counted next week. He has been doggedly going after the Liberals throughout the race over these issues at campaign stops and in highly circulated social media videos. Such a fresh face at the helm of the Official Opposition would put pressure on the Liberals when it comes to these hot-button issues. About time, too, because the Liberals seem somewhat detached from the worries of Canadians when it comes to the worsening economy, the increasing cost of living, the deterioration of heath care and the disregard for the travel woes of people who have suffered a long isolation due to the Covid-19 pandemic and deserve a worry-free vacation. I am convinced that after the loss of two elections in two years the Conservative Party of Canada will have learned from its past mistakes. After two failed leaders they will concentrate seriously on defeating the governing Liberals and choose the right leader this time. In focusing on issues bordering on fantasy land the Liberals seem to have lost touch with the pressing realties of everyday Canadians. Their power-preserving deal with the NDP is leading the Liberals into embracing more costly projects the country cannot afford. I'm curious to see on how the Liberal government approaches these issues in the fall. Their habit of printing money, and giving away money we do not have internationally, without accountability, will hopefully be scrutinized. For the record. inflation is a growing concern for all economic observers. The recent surge in inflation is being driven by soaring energy prices, a resounding demand for recently reopened services, supply chain problems, container shortages and labor shortages. Current inflationary pressures seem to be lasting longer than anticipated. The rise in the inflation rate increases financing costs and will have a debilitating effect on the economy unless dealt with effectively. Canada may not be in an official recession right now but with inflation taking a harsh bite out of every personal, and every business budget, the economy is in turmoil. No matter where Canadians turn, there is no reprieve; housing is more expensive, driving a car is more expensive, food is more expensive. Right now, many Canadian households are trying to adjust their budgets, cutting costs where they can in order to keep up with their monthly bills. But as the cost of living continues to rise - it's likely to get worse before it gets better - households will have to make increasingly difficult choices about what to cut, and could find themselves piling on debt to make ends meet. With inflation nearing a 40-year high, there is mounting pressure for more aggressive interest rate hikes to tame inflation. Canadians who are not financially prepared to absorb future interest rate increases will soon find themselves in financial trouble, as they become unable to manage the increasing costs of their debt repayments. As the Bank of Canada is still poised to raise the interest rate aggressively this week, despite the drop in the inflation rate, this action will create a real problem for people engaged in financial responsibilities to the edge of their income. "Inflation in Canada has come down a little, but it remains far too high," Tiif Macklem the Bank of Canada Governor said. "We know our job is not done yet - it won't be done until inflation gets back to the two per cent target." Some of Canada's major banks are forecasting the central bank will raise the key interest rate by three-quarters of a percentage point, bringing it to 3.25 per cent. Higher interest rates feed into higher lending rates across the economy, making it more expensive for Canadians and businesses to borrow money. The central bank is hoping that by increasing the cost of debt, spending in the economy will slow and inflation will cool. However, senior economist David Macdonald at the Canadian Centre for Policy Alternatives warns that the rapid pace of the hikes could have serious repercussions because of the high levels of business and household debt, and I tend to agree with him. "What I really wanted to bring out in this analysis was the fact that private sector debt is much higher today than it was in the 1980s and 1990s and previous times that we've seen this kind of rapid rate increase," said Macdonald. "And why this matters, of course, is that it's not just the interest rate that matters, the interest rate is charged on something. It's charged on private sector debt." In an interesting proposal, Macdonald has been calling for alternative solutions to cool inflation, using federal government rather than central bank policy. I mention this, because the so called independent national bank systems such as the Bank of Canada, the Bank of England, the Federal Reserve systems (FED) in the United States etc. are all intertwined with the Bank of International Settlements (BIS). In fact they are anything but independent and they represent a globalist intention rather than national interests. Wouldn't it make more sense that all institutions dealing with the well-being of people be under the responsibility of the government elected by the people rather than under some out of control international entities whose priorities do not necessarily coincide with national interests? So here is something to consider: it is not just that high inflation that is bad, but reducing high inflation back down to low inflation hurts a lot.