44th Parl. 1st Sess.
December 10, 2021 10:00AM
- Dec/10/21 12:12:10 p.m.
- Watch
- Re: Bill C-2
moved:
“That it be an instruction to the Standing Committee on Finance that it have the power to divide Bill C-2, an act to provide further support in response to COVID-19, into two bills: Bill C-2A, an act to provide further support in response to COVID-19 (business support programs); and Bill C-2B, an act to provide further support in response to COVID-19 (benefits and leave), provided that (a) Bill C-2A be made up of part 1 of Bill C-2; (b) Bill C-2B be made up of all other parts of Bill C-2; (c) the House orders Bill C-2A and Bill C-2B to be printed; (d) the Law Clerk and parliamentary counsel be authorized to make any technical changes or corrections as may be necessary to give effect to this motion and; (e) if Bill C-2A is not reported back to the House within two sitting days after the adoption of this motion, it shall be deemed reported without amendment.”
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- Dec/10/21 12:12:10 p.m.
- Watch
- Re: Bill C-2
He said: Madam Speaker, sometimes the simplest questions are the hardest to answer. The other day, I was in the finance committee, where the government was asking parliamentarians to approve another $7-billion expenditure. It sent 10 government officials to tell us all of the wonderful things this $7 billion would do. I had a simple question: Where does the money come from? Silence blanketed the room.
I sat quietly and patiently, looking up at the Zoom screen, to find out if a reassuring voice would answer an obvious and simple question. We were told the majority of the 10 officials were from the finance department. If any department were able to tell us where the money comes from, one would expect it would be finance, but silence continued to triumph. The awkwardness thickened to the point that it could be cut with a knife.
Finally, the chair broke in and encouraged me to ask another question that might be easier for these 10 government officials to answer. I then asked the chair if he could tell us where the money comes from. He was likewise perplexed. He sat baffled in front of the committee, unaware of what to do. This is the chair of Canada's parliamentary finance committee, here in a G7 country.
Of course, there are really only four places that money that passes through the House comes from: one, it can be taxed; two, it can be borrowed; three, it can be printed; or four, God forbid, it can be cut from something else and reallocated. However, none of those answers were forthcoming.
Instead, a fifth novel explanation of the providence of this money came forward, finally, about three minutes into the long committee silence. One official said that the money is within the government's broader macroeconomic framework and that he could not speak to it. If $7 billion can appear magically from something called a “government's broader macroeconomic framework”, then everyone should have a broader macroeconomic framework.
Imagine what a single mother could buy at the local grocery store if, instead of having to rely on decreasingly valuable Canadian dollars to buy food for her kids, she could carry around with her a broader macroeconomic framework. Imagine if the worker who cannot afford to gas up his car could just open up his wallet and, instead of pulling out increasingly worthless Canadian dollars, he could pull out a card inscribed with “broader macroeconomic framework”. Then he might even be able to fill up his tank with gas. Maybe that 28-year-old, who lives in his parents' basement, despite having a good job, because house price inflation has made it impossible for him to buy, could, instead of using inferior Canadian currency to bid on a house, walk up to the realtor and say that he has decided to pay not with cash, not even to pay with debt, but with a broader macroeconomic framework card.
I hope that at the end of my remarks, a minister and the government will announce, just in time for Christmas gift purchases, that they will mail out a broader macroeconomic framework to every Canadian household, so parents could, in collaboration with Santa Claus, make sure there are gifts under the tree for every child in these impossibly difficult times.
If we are going to ask the simple question of where the money comes from, why do we not ask the yet simpler question of what money is, because sometimes it is important to go back to first principles in order to make sense of this crazy world of ours. Money, of course, is merely a technology by which we transport value over time and space. Without it, our spaces would have to consume in the present everything that it produces.
Most species do. They have to eat what they kill right away, lest it be stolen or spoil. Squirrels can squirrel away a bit, which is a good habit the government should learn from, but most species have to use it or lose it.
We developed a technology to allow two people exchanging things to go ahead with their exchange. Even if each did not have the ability to supply the other with what they wanted, they could simply use this technology, called money, to transport the value between each other across time and different geographies.
Over time, money has taken many forms. In one island in the South Pacific it was a ledger carved on scarce limestone. In some places it was beads or seashells. In prisons, they use cigarettes. When I was a kid in school, it was candy. Throughout history it became metal, some precious, some brute. We had gold, silver and copper. Many different means of translating value across space and time have been used.
Politicians have found it a nuisance to pay their bills and use money with integrity. Back in 1215, poor old King John was forced by the barons and the commoners to sign this nuisance of a document called the Magna Carta, the great charter. In that document was inscribed the principle that the crown could not tax what the people had not approved. That principle is still in place here in this Parliament today. The government cannot spend what we do not vote on, 800 years later.
When we look around and see the beautiful green here, we know where it comes from. It was the colour of the fields in which King John was made low. That green should remind everyone that the people in the fields doing the work are the ones who produce the money we spend around here. That might have been a better answer in the committee than the government's broader macroeconomic framework, but I digress. After King John was prevented from taxing what people had not approved and was forced to go back to the commoners to get their permission to take their money, he and his successors became increasingly creative in sourcing the cash they acquired.
Years later, King Henry VIII, who is more famous for clipping off the heads of his subjects, decided that he could get his hands on money by clipping coins. He and his regime would clip off the edge of a coin. That way, they could melt those edges down and make more coins. Back then, it was hard to make coins because it was the British pound, which was a pound of silver. By clipping off a piece, they could melt it down and create more coins and Henry could inflate the value of currency in his hands, thereby deflating the value of the wages that his peasant class earned.
He got even more creative later on, which is how he got his famous nickname. He would have his minters melt down the British pound and re-mint it with just a tiny coating of silver around the outside of a copper coin. People thought they were getting a silver coin. Meanwhile, on the inside, they actually got copper.
The problem was this: Being the egomaniac he was, he did not want a profile shot, so he had his face placed facing outward on the coin, so it stared everyone in the eye when they looked at it. Because his nose protruded out from the coin, it would rub against the inside of people's pockets and the silver would scrape off the tip of his nose. Then they had a silver coin with a red nose, which is how he got the nickname “old coppernose”. Every time someone saw that red copper nose, they knew the king had stolen the real value of their money.
Throughout time, other politicians found other creative ways. Dionysius, who was a Greek dictator in Syracuse, actually took all the one drachma coins and restamped them to give them a value of two drachma, so all of a sudden he had twice as much money.
I hesitate to tell that story in the House because I worry the Prime Minister might think he could do the same. If we run out of money, we can always get more and turn loonies into toonies, and toonies to fours. That might be the next creative idea by which government could get its hands on money.
Throughout the 20th century, we saw this same tactic of cash creation. The most famous example was in the early 1920s in Germany. It created so many new units of account that inflation ran out of control. People needed to have a wheelbarrow full of cash in order to buy a loaf of bread. If people went to the bar to try and drink away their inflationary blues, they ordered all their beer the beginning of the night because, as the minutes went on, beer became more expensive.
We, in this part of the world, have not been immune to this inflationary disease ourselves. During the post-war era, we inherited monstrous debts from fighting the fascists, but governments had hard money from the end of the war until the early 70s. We basically operated on an American-led standard. If someone had a U.S. greenback, they could exchange it at a rate of $35 per ounce of gold.
In that period, we had an enormous amount of prosperity. The Americans paid off their war debts here in Canada with solid currency. We wrestled the inflationary beast to the ground in the post-war era. We took our record debts, which we inherited from the war, and we paid them off. We increased the size of the Canadian economy by 300%. By 1973, we had basically become a debt-free country.
However, what happened in the 1970s? President Nixon wanted to spend on warfare and welfare. Of course, the Americans were bogged down in Vietnam, which was a costly enterprise, and President Nixon wanted to keep his popularity at home, so he decided to spend, spend, spend.
In the decade that followed 1971, not only did they unleash the American dollar from any particular standard, but they also increased the number of U.S. dollars in circulation by 150%, while output only grew by about 39%. In other words, the amount of money grew about four times faster than the amount of underlying output that the money represented.
Here in Canada, we had Pierre Elliott Trudeau. He looked down at all the inflation that the U.S. government was creating. It had reached double-digit inflation down there. It was a total inflationary crisis. The American dollar was devalued on an international basis and was incapable of buying affordable petroleum on the world market. They like to blame OPEC, but they took no responsibility for the fact that the unit with which they were buying oil on the international markets was itself devalued.
Trudeau looked at all the misery in the United States. He looked at how people were lined up at gas stations waiting for an hour and a half to gas up their cars. He saw the poverty that was overtaking inner-city streets. He saw the expanding wealth gap in the United States of America. What did Pierre Elliott Trudeau say to all that? He said, “Let us have some of that up here.”
Then he started printing money here in Canada and massively increased the money supply within Canada. I have the data right here. Between 1971 and 1981, the money supply in Canada grew by over 200%, while GDP only grew in real terms by about 47%. We can imagine that money is growing in supply at more than four times the rate the economy is growing, so we have more dollars chasing fewer goods. What does that get us?
Some hon. members: Inflation.
Mr. Pierre Poilievre: That is right. We all learned that in grade school, but apparently some lessons need to be learned and relearned here in this House of Commons. What happened was by the early 1980s, inflation had risen to 12% in Canada. The government claimed that if it kept printing money, this would stimulate the economy and create jobs.
What it delivered was 12% unemployment and 12% inflation. It is worth spending a minute on this. Why is it that high inflation actually kills jobs, contrary to what the so-called experts always tell us? The answer is that prices are information; prices are some of the most powerful and condensed forms of information ever known to humankind.
The great economist Milton Friedman explained how complicated it is to make a pencil. He basically said that the lead comes from a lead mine in Asia; the rubber comes from a rubber tree in another part of the world; the timber might come from a forest in the western United States, and the paint might come from a titanium mine somewhere in Africa. All these people are working together to make a pencil. None of them actually know they are making a pencil, but they agree to make the ingredients of the pencil because they are zapped with a laser beam called “the price signal”. The price is high enough to incentivize them to make the investments and do the work to supply the goods.
The consumer knows what it costs to make that pencil, not because they called all the mines and all the forests and asked them all to feed in the price, and pulled out their calculator and figured out what it should cost to make a pencil. No, the consumer knows because when they walked into the store there was a price, and that price basically zapped to them the cost of making the pencil; the hundreds of people who unknowingly conspired to make it communicated that information to the buyer just like that. Then the consumer calculated in their mind that the pencil was worth more than the money they had to spend to get it. Therefore, all of those laser beams led to that wonderful little transaction that brought the consumer home a pencil.
Here is the problem with inflation: It messes with all those information signals.
Just last week, I was in New Brunswick and I was speaking to a gentleman who was in a recycling business. He signs five-year agreements to do the recycling work for other companies. Here is the problem: When he does not know what the price is going to be over the next five years, he does not know what he should charge. He locked in contracts that expected inflation to be the normal 2%. Now, we have 5% inflation and it is potentially rising. The difference is that over a five-year period, instead of having 10% total inflation it will be closer to 25% or, with compound interest, 30%. Now, he is getting actually 20% less in his fifth year than he thought he was going to get.
Therefore, all these information signals that allow people to exchange work for wages, product for payment and investment for interest are totally scrambled by inflation. The technology that is supposed to allow us to transport value through space and time is scrambled. It is like scrambling the hard drive on a computer. All these signals mess with the ability of humans to exchange value with one another, and when that system breaks down, everything breaks down. That is why inflation has almost always led to social disorder.
It also allows those with the greatest means to profit the most, because they can move their money into things that are inflation-protected, like land, buildings, private businesses, stocks, bonds and countless other assets that inflate in price. Meanwhile, the people who actually live off their wages see a real pay cut. Those people who are wealthy enough not only profit by watching their assets inflate in value, but the real value of the debts that they take on shrinks in inflation-adjusted terms. Therefore, those who have access to the financial system get vastly richer as their debts shrink in real value and their assets inflate; and those who do the work, the people in the fields for whom we painted these floors green, watch the fruits of their labours wither away by this inflation.
Therefore, I rise today to call for a restoration of the real integrity of our money, to bring back the meaning of money, which is to transport value over space and time, to restore free markets among free people and to put the commoner ahead of the Crown.
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- Dec/10/21 12:33:15 p.m.
- Watch
- Re: Bill C-2
Madam Speaker, it is because the member forgets the other side of the equation, which goes back to the very first question I asked at the outset: Where does the money come from? He has another $7 billion of expenditures that he wants to impose on Canadians.
I very helpfully explained to him how a pencil is made. I thought he would take out his pencil to scribble some notes so that he could finally explain on behalf of his government where the $7 billion will come from, but apparently I gave him too much credit.
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- Dec/10/21 12:34:51 p.m.
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- Re: Bill C-2
Madam Speaker, the member is forgetting that debts repaid by Canadians, whether they are from Quebec, Alberta or anywhere else in the country, are not paid by a group or a government. Those debts are paid by working people.
We need to stop thinking about identity groups and starting thinking about individual working citizens. Every person is responsible for themselves, and every person must have more economic freedom. If people had had more economic freedom in those days, the government would not have been able to impose its debt on them.
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- Dec/10/21 12:36:54 p.m.
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- Re: Bill C-2
Madam Speaker, I find it very interesting that the NDP does not seem to care about the effect on seniors of government-created inflation. Of course, inflation hurts savers the most.
Seniors, because of this incredibly high inflation, get rates of return on their savings that are inferior to the rise in the cost of living, which means that every single year they are becoming poorer. Meanwhile, the cash creation that the government has done floods financial markets. Just yesterday, the finance minister said that housing prices are up and food prices are more expensive, but not to worry as the stock market is rising. Of course it is rising. Having had $400 billion pumped into it, it has gone up.
The big corporations and their CEOs can use all that money for share buybacks, dividends and capital appreciation. Meanwhile, the inflated cost of living leaves our seniors poorer and poorer every single year.
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- Dec/10/21 12:38:41 p.m.
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- Re: Bill C-2
Madam Speaker, the question I asked was, “How much debt do Canadians owe, publicly and privately?”, and the finance minister said she could not say. This is the person responsible for the finances of the nation, so I asked the top bureaucrat she had on the panel with her. He said he did not know either, so I went to Statistics Canada, which just by chance updated that number today. Therefore, I announce, on the floor of the House of Commons, that Canadians owe nine trillion dollars. That is “trillion” with a “t”. Our debt level is now 371% of our GDP, $3.71 of debt for every one dollar of output. That is nearly double the historic level, and it is a massive risk that could lead to detonation when interest rates return to normal.
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- Dec/10/21 12:40:59 p.m.
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- Re: Bill C-2
Madam Speaker, one example of a fossil fuel subsidy would be the taxpayer-funded plane ticket that the member receives to fly here on a petroleum-burning airplane in order to sit in the House of Commons, but speaking of corporate subsidies, she raises a good point in general. I believe we should let businesses keep more of what they actually earn instead of providing them with government handouts. That way, we would go to a free-market economy, instead of state capitalism.
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