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What is responsible for inflation in Canada?

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Meistro Posted: Tue, Oct 2 2007 10:23 PM

Deficiet spending?  Fractional Reserve Banking?  Bank of Canada?  Credit expansion?

 

... just as the State has no money of its own, so it has no power of its own - Albert Jay Nock

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 Under interest rate targetting central banking systems, deficit spending does not result in inflation other than by raising the natural rate of interest by increasing demand for loans. If the central bank keeps rate targets fixed while government deficits increase, all else being equal, the inflation of the currency will accelerate.

 Canada does not have government deficits at the federal level, therefore the impact of deficit spending must be negligible. However the central bank is likely targetting interest rates lower than the natural rate in order to maintain 1-2% "good" inflation as its mission requires it to.

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Gabriel replied on Fri, Oct 5 2007 10:12 PM

Greedy capitalists/speculators of course!!!!

 *ducks* :-p

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