Debt Crisis Inflation and Merry Christmas
Written by Margaret Johnson | Tuesday, 06 December 2011
Kelly Sinoski reported in the Vancouver Sun in November that municipal spending was up 46% over the last 10 years in British Columbia according to the Canadian Federation of Independent Business. Although no direct reference is made to debt this piece of news gives a bird’s eye view of how governments throughout the world have been struggling – and it begins with expenses, or more specifically uncontrolled expenses.
We normally think of inflation as being separate from taxation. Even inflation as reported by governments excludes certain items that have volatile price movements, most notably food and energy. These are big ticket items for consumers as are direct and indirect tax increases.
The above report noted that municipal revenues from sales of services — everything from parking fees to business licences — have more than doubled over the decade. Interesting how municipal revenues become uncontrolled expenses for consumers.
This begs the question - what are uncontrolled expenses? Is an uncontrolled expense for a consumer a tax increase from government(s)? What are uncontrolled expenses for governments? Who’s in control here?
And then there is inflation. Who controls the price of food and gas (energy)?
Hmm. It’s becoming more and more apparent that nobody’s in control. Inflation seems to be one of life’s accepted mysteries where prices go up and never go down, just like taxes. This leads to everybody’s expenses going up.
Municipalities targeted population increases in the Canadian Federation of Independent Business report as one of the major culprits for increased spending. This factor could also be applied to the increased cost of housing and energy for individuals and families as demand goes up, supply goes down and prices go up.
And then there is Christmas. How do we categorize it? The obvious answer would be to assign Christmas a discretionary expense status. That would make it a controllable expense. This philosophy is nicely gift wrapped in billions of dollars of Yuletide advertising, promotions, classic and biblical stories of love and giving and an old fat guy dressed in red flying through the skies. We are not only pressured to spend, we are prodded, stimulated and bombarded with reasons to go overboard by an instant gratification culture that worships and actually believes in the Christmas spirit. It’s the giving that counts. Don’t worry (about the money at Christmas time), be happy.
So, we have uncontrollable expenses like inflation and taxation and controllable ones like Christmas. In all three cases credit has rescued the consumer for decades as it has governments and corporations from restrictions imposed by cash. In many respects we have a double personality in the credit society. Dr. Jekyll diligently watches the pennies and balances the cheque book while Mr. Hyde is out in the shopping mall with the credit cards. The two never meet fact to face, unless of course, there is a debt crisis.
And, by the way, we have several debt crises in the world today.
It’s important to note that inflation and taxation are significant handcuffs attached to our bondage of debt. It just isn’t the controllable discretionary expenses like Christmas that drive us into the poor house but also the essential expenses.
Maybe the best gift this Christmas is to stop borrowing.
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