And the cost of servicing Canada’s ballooning debt has surged.
The federal budget deficit will come in at $95.6 billion for the 2021 – 2022 fiscal year.
It’s down from a whopping $314.0 billion last year, but only because the government has reduced the payments they gave out amid lockdowns.
$95.6 billion is still far ahead of historical norms.
And of course, that $314.0 billion from the previous year is added onto our national debt.
Soaring debt costs
Debt has a price, and that price is going up dramatically.
Last year, debt servicing costs reached $20.5 billion.
This year, costs have reached $24.8 billion.
Put in another way, Canada’s debt servicing costs alone are about equal to our entire military budget.
With interest rates set to rise further, and with the government still running massive deficits, those costs will go up even more.
Even before the pandemic, the Trudeau Liberals were running large deficits, and had broken their “3 small deficits” promise from the 2015 campaign.
The Liberals were warned that low interest rates wouldn’t last forever, and that more and more of our tax dollars would go towards debt service.
They ignored those warnings, yet here we are.
Bank of Canada complicity
The Liberals have been able to ‘pay’ for this debt binge because the Bank of Canada dramatically expanded the ‘printing’ of money.
But despite all the money flowing around, Canadians are getting poorer.
That’s because there is more money chasing fewer goods, and wages can’t keep up with inflation.
The economic policies of the Liberal government and the monetary policies of the Bank of Canada have combined to rob Canadians of much our purchasing power, and Canadians are finding it increasingly difficult to make ends meet.
Out-of-control spending hurts, rather than helps
Because the relationship between government spending, the expanding money supply, and the rising cost-of-living is obscured for many people, there are still large swaths of Canadians who feel that more government spending helps, and restrained spending hurts.
Yet, when the problem facing Canada is too much money chasing too few goods, and when debt servicing costs are rising, the best way to help Canadians is for the government to reduce spending, step back, and instead let individual freedom, entrepreneurship, and creativity flourish free from state control.
Spencer Fernando
