Opinion | Bank of Canada’s fight against inflation is a war on workers

This hurts regular people far worse than the upper class that has spent 3+ years hording and acquiring assets. They're trying to fix inept government policy on the backs of the labour that allows the country to function rather than having the hording class pay a fair share to sustain society.

Property taxes should increase exponentially with each additional property you own. Double or triple for corporations. That will do a large part to fix our issues, but the government will only enact policies favourable to the landowners.

That's quite a good solution. I've been looking at real estate lately and a lot of the lower priced homes have in their description something like "great starter home or investment property." Investors shouldn't be able to snatch up all the "starter homes". Let's let some of us get into the market!
- Yeah, and rental prices have skyrocketed too.
  
  During the next federal election this will be my "single issue" that will determine who I vote for.
  
  At this point I can ignore our insane grocery/telecom prices, even though that is still a huge issue. The housing crises has far worse ripple effects down the chain: potential buyers can't buy so they rent nicer places, potential renters can't rent the nice places so they are overpaying for the rentals they can afford, and people who can't afford any of the rental prices are scraping by with roommates or on the streets.
  
  And these development companies have the nerve to go to court over government investigations over their shady practices.
  
  Shameless.
- "Starter home", I'm not sure how much more disdain I could have for that title. I bought a home in 2003 that would probably be called that now. It was a typical size for when it was built in 1982 but of course homes must be bigger now. My wife has a friend who has a home that's nearly double the size yet she's jealous of all the storage space we have. There's this trend of building homes with huge main spaces and I don't understand why.
  
  I understand if people end up having to move for work of course, and if the home they're in is literally too small for their family, I just don't understand moving just because a bigger house is available.
Agreed. Pretty much any property a person owns past the first single-family home or equivalent should be treated as income and business expense and should be taxed as such. There should be a bigger incentive when you move homes to buy a new home and sell your previous. Rather than buying a home when you move and putting the previous up for rent, slowly accumulating properties to be used as passive income and denying homeownership to younger people.

I'm not 100% sure we should even allow corporations to own housing property at all, but that's a bigger question.
- Unfortunately, in the case of housing a lot of the abuses of tenants' rights tends to be caused by amateur landlords (who don't know how to properly plan ahead). There are a lot of laws to know and unexpected costs involved, so having a larger building management entity makes sense here. It would be cool if non-profit renters' co-ops (like the people in Hamilton trying to buy their apartment building) could be successfully formed.
- I much prefer corporations owning rental housing than individuals. They at least have staff and somewhat understand the laws. The idea that all sorts of individuals will choose to be landlords of one or two properties and deal with all the toxic shit that comes with it is incredibly naive in my opinion.
- On the other hand, making it expensive to be a landlord also drives up what people need to pay for rent to cover those costs. There should be options for people to get housing without having to commit to owning it themselves. Income from rental properties is subject to income taxes, and there's lots of subsidies/incentives that reduce housing costs that only apply to a primary dwelling, not rental properties.
  
  Personally, I'd like to see a crown corp that does housing. Set reasonable pricing and a base standard of what people should expect from a rental property and the private industry has to compete with that.
- Any property that you put up for rent is actually treated as a business by the CRA.
  
  You pay higher property taxes on a rental.
  
  If you sell, and the property isn't your primary residence, you pay capital gains taxes.
  
  All rental income is taxed and you can't claim that rental income... you can claim interest paid one the mortgage, but it's not that much.
  
  There are incentives to maintain a single home when you're buying and selling... If you buy/sell your primary residence you don't pay capital gains taxes.
  
  Should there be more taxing on second and more properties that are investment... maybe. If you increase the cost of ownership, that cost is placed on the renter. A property owner isn't in the game for fun and they aren't going to be willing to take a lot just for the benefit of a renter. It might put pressure on speculators to increase the taxes, but... It's not as 1:1 as people like to think.
I agree but it can be difficult to enforce... Just registered the property to a shell company, your spouse, children, etc.
- Prevent companies from owning housing without having the increased taxation. Treat married couples as a single unit (this may be problematic with separated couples?). I don't have a good answer for children except that then you are effectively gifting all your kids and relatives a house. So if THEY want to buy their own, different house they pay increased taxes or sell the previous. And that prevents one person from owning dozens of properties; divesting them to their children. Which really means if your goal is to property horde you need more kids...which is a very weird incentive to be sure.
This hurts regular people far worse than the upper class

As it needs to be, of course. Only regular people are a large enough group to create an inflationary environment. One rich guy with an unlimited bank account faces no competition to drive prices higher.

Which is the challenge the BoC faces. Interest rates don't impact the poor, at least not directly. They aren't given loans, so rates mean nothing to them. Rates can only try to scare the small number of rich people away from employing the poor, but the rich can shoulder rate hikes for quite a long time before they give up on employing the poor.

Property taxes should increase exponentially with each additional property you own.

Same problem, though, as only the rich own property. You need something that targets regular people if you want fast results. As before, trying to squeeze the rich might work eventually, but they can hang on for quite a while. Higher income taxes across the board would curb things pretty quickly, though.

Housing has become an investment vehicle. This is as insane as making water or air an investment vehicle. All people need a place to live, investors should find something else to jerk off with.

We need a strategy to massively expand non-profit housing in Canada!

https://www.youtube.com/watch?v=sKudSeqHSJk

https://www.youtube.com/watch?v=41VJudBdYXY

https://www.youtube.com/watch?v=Pgxweff5AjQ

PS. Apparently, something like 3/4 of Canada's national wealth is "is wrapped up in real estate" (https://globalnews.ca/news/4775685/canada-national-wealth-real-estate/). What if it was invested in productive endeavours instead!?

Here is an alternative Piped link(s): https://piped.video/watch?v=sKudSeqHSJk

https://piped.video/watch?v=41VJudBdYXY

Piped is a privacy-respecting open-source alternative frontend to YouTube.

I'm open-source, check me out at GitHub.
- Good bot.
https://money.usnews.com/investing/stock-market-news/slideshows/ways-to-invest-in-water
- https://youtu.be/_Nt5by-TsUw
- https://youtu.be/_Nt5by-TsUw

The inflation is fueled by short supply rather than excess demand.

I'm no economist but if our current supplies cannot even meet the baseline demand, rising rate does little to nothing but hurt the average Canadian.

The average Canadian already have nothing left to "cut" on their spending, people gotta eat and shelter. This is the baseline demand. Unless the goal is to make people homeless and starve, without increasing supply and invest in productive investments, the inflation will not end.

There isn't a whole lot of evidence to suggest that there are supply issues. Even the so-called chip shortage later revealed that chip output saw no decline throughout the pandemic or since.

The exception being related to the European fertilizer plant shutdown followed by the Ukraine conflict, cutting off access to Russian fertilizer, prompting some issues related to food. That does explain some inflationary pressure in 2022, however, those issues have largely cleared by now. The farm gate price of food is pretty much back to normal at this point.

This round of inflation seems to be fuelled simply by people being willing to spend more. We saw a similar phenomena following the end of WWII.
- I agree there isn't much evidence for current supply issues. However...
  
  Even the so-called chip shortage later revealed that chip output saw no decline throughout the pandemic or since.
  
  Output may have not reduced, but it did change during the pandemic. Many fabs retired their legacy equipment to move to newer processes. However, the auto industry's designs were still based on the old processes, so they experienced a shortage. This compounded the delayed demand of consumers who didn't buy cars due to uncertainty and limited travel. That shortage has mostly been resolved, but hasn't completely settled (there are basically no "deals" and old used cars are still in high demand).

Bank of Canada is only following the current leading economic theories such as Countercyclical Monetary Policy . The issue is that economic theories change with technology and advancements. There's an argument to be made that the prevailing theories from the early 2000s no longer apply, but what is the alternative?

The government has other levers on inflation that the BOC does not. If they were using them, there would be less pressure on the BOC to use their one lever. The government has a choice of levers that impact different people differently, and could help spread out the pain, like corporate tax rates, and passing laws that effect property tax calculations for investment properties.
- The government
  
  Governments. Both federal and provincial governments can manage corporate tax rates, and both provincial and municipal governments can manage property tax rates.
  
  But each of these governments serve the will of the people, and all three governments ultimately serve the very same people. Good luck convincing the people that they should willing choose to pay higher taxes.
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- So this to me is the biggest problem when it comes to fiscal policy. During recessions, central banks reduce interest rates AND increase money supply in order to stimulate the economy. Governments HAVE to do their part by increasing spending but over the last 3 decades, government spendings have NOT matched the actions of the BOC in proportion. Spending needs to be immediate, and not some delayed project that takes 5 years to implement. Sub point to this is that government investment programs need to be counter-cyclical as much as possible (i.e. Chinese gov'ts massive spending during the last global downturn in infrastructure). And during inflationary times, governments need to reduce or restrain spending, and enact policies that remove supply constraints in essential goods like housing.
  
  The BIGGEST issue we've had in the past 30-40 years has been the former - central banks having to act alone to resuscitate the economies without governments doing their part. Which has led to a successive cycle of cheap money-led boom and bust that's brought interest rates lower and lower which has fueled the wealth divide that's brought about the social inequities and class divide we have today.
  
  Unfortunately, I don't see it ending soon.
Instead of controlling wages, control profits.

High inflation is worse for workers than high interest rates since wage hikes always lag price rises. This round of inflation was brought to us by poor economic decisions .. pumping billions of dollars into the economy without raising taxes, as well as the Ukraine war. It wasn't caused by corporate greed, as some claim. The BoC is doing absolutely the right thing. If they don't raise rates now they only kick the can down the road when the pain would be far worse.

High interest increases mortgage payments, which increases rent, which affects workers as well.
From the votes we can see your comment is controversial.

Maybe historically your statement would be true. But, I strongly feel that what we're going through right now is completely different.

You can't say that inflation isn't caused by corporate greed when companies are making huge windfall profits after the pandemic on basic necessities like food and medication. This is 100% greed. In some other markets, prices became high because of high demand and low output due to supply chain issues during the pandemic, like for construction materials or computer chips, but these problems have been resolved since then and yet, companies still charge the same high price.

Yes, pumping money into the economy has had some effect, and I believe they are planning on raising taxes to correct this, but they're going to tax the workers instead of taxing companies who benefited from this relief in the end. Without that money being injected, people wouldn't have spent anything. And it's not like people could save this money. They had to spend it to survive.
- @cyborganism @maporita The money that they pumped into the economy is going into the pockets of the corporations (and their shareholders) because the recipients had to use it to pay for essentials like food, and yet it will not be the corporations that are taxed to recover it. Why is the government essentially paying for the profits of corporations and their shareholders??? This only serves to exacerbate the gap between the wealthy and the vast number of poorer people.

Higher interest rates are the tough medicine we do need today to combat inflation. But government policies need to be there to ensure the social costs are minimized but somehow that safety net isn't sufficient today is it? Additionally more action needs to be done on oligopolies and consolidation that's happening across every industry that reduces competition.

Higher interest rates are the tough medicine we do need today to combat inflation.

Rising interest costs were responsible for 30% of the CPI growth as of the latest figures. Higher interest rates will only send inflation higher. Interest rates are now what is driving inflation. Excluding interest costs, CPI is already back in the 2% target range.

Ah yes, liberalism. The last ditch attempt to kill democracy with capitalism.

"inflation is actually good for the non-rich" -- some embarrassed millionaire's opinion.

Oh, that's rich indeed.