It’s another way in which this country increasingly punishes those who are productive and responsible.
Any society that wants to achieve durable, long-term success must incentivize saving.
Savings represent both the ability of a society to be productive and generate excess value, and confidence in a better future.
Smart societies thus seek to reward those who save, because those savings are the investment that drives a society forward.
By contrast, foolish and broken societies punish those who save.
They reward irresponsibility and incentivize debt – often by making it nearly impossible for many to hold onto their standard of living without it. They devalue the national currency, destroy confidence in the future, and push a kind of thinking that is increasingly short-term and destructive in the long-run. They bail-out those who fail at the expense of those who succeed, and concentrate economic power in the hands of the state and those affiliated with it.
What type of society do we have today?
The answer is clear.
With a radical, anti-growth, anti-responsibility, and fiscally irresponsible government, those who save are punished.
Deviation from the past
For many Canadians who save up money, there is likely a growing sense that their prudent actions are not being rewarded.
And that sense is correct.
Past moments of high inflation were also accompanied by high interest rates in savings accounts.
But as noted in a recent report, that isn’t the case this time:
“The savings accounts of Canadians have sprung a leak.
As inflation tops eight per cent, anyone with money in the bank is seeing their savings drip away at the fastest rate on record because interest rates for savings accounts, still largely languishing at around one per cent, haven’t kept up.
“They will lose money. The value of their savings is decreasing,” said Claire Celerier, an associate professor of finance at the University of Toronto’s Rotman School of Management.
It’s a sharp contrast to the last time inflation ran this hot. In 1981, inflation peaked at over 12 per cent, but Statistics Canada data says bank accounts were paying out 19 per cent interest, and even in 1990 when inflation was running a little under five per cent, accounts were paying out over nine per cent.”
While this is largely due to the lack of competition in the banking sector, there are deeper societal issues at play here.
Savers have already been punished through rampant money printing, which makes each individual unit of money worth less and thus renders savings less valuable.
Long-term low interest rates and the incompetence of the Bank of Canada has also played a role in lagging interest rates for savers.
So, this is yet another way in which many Canadians are falling further behind.
An irresponsible government rewards irresponsible behaviour
Justin Trudeau thinks budgets balance themselves.
Chrystia Freeland thinks spending more is always the answer.
Jagmeet Singh proposes giving out more printed money to solve inflation, when we all know that will just make things even worse.
That is the level of ‘intellectual heft’ guiding Canada at this moment.
And it’s all built on a foundation of neo-communist, anti-freedom thinking.
The government seeks to punish those who act responsibly, while rewarding short-term thinking.
They do that because long-term thinking and responsibility leads to financial independence, while short-term thinking leads to desperation and dependence on the state.
Wanting the latter, the government rewards the latter.
Until we return to being a nation that rewards responsibility – which means embracing fiscal prudence and sound money – the damage and vulnerability in our economy will continue to escalate.
Spencer Fernando
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