Pierre Poilivre recently explained the concept of inflation in the simplest terms possible, using the old “$10 and 10 loaves of bread” analogy.
Poilievre pinned the rapid rise of inflation on his competitor, Prime Minister Justin Trudeau, and estimates that a “half trillion” of printed money has been added in Canada insce Covid-19 alone.
See video here: https://www.youtube.com/watch?v=4w7O80o_YPY&ab_channel=GoldSilverIndex
Take a look at the money supply in Canada:
Keep in mind, this is only M0 (the currency in circulation plus commercial bank reserve balances at the central bank), which is the strictest and smallest definition of monetary supply.
According to the Richmond Federal Reserve website, “The smallest and most liquid measure, M0, is strictly currency in circulation plus commercial bank reserve balances at Federal Reserve Banks; M0 is often referred to as the “monetary base.” M1 is defined as the sum of currency in circulation, demand deposits at commercial banks, and other liquid deposits; it is often referred to as “narrow money.” M2 is everything included in M1 plus savings accounts, time deposits (under $100,000), and retail money market funds. M3 is everything in M2 plus larger time deposits and institutional money market funds. (Because the cost of estimating M3 was thought to outweigh its value, the Fed stopped reporting it in 2006.)”
https://www.richmondfed.org/publications/research/econ_focus/2019/q1/jargon_alert#
Pierre Poilievre said: “We’re going to use this as an analogy to explain why inflation is so high and how we’re going to bring it down. Okay, so Trudeau’s government has created about a half trillion dollars of new money in the last two years. That means more cash in the system. That money goes out and bids up the goods and services that we buy.
“So imagine it this way. You have an economy with $10 and ten loaves of bread. It’s $1 for each loaf of bread, right? Now, if you double the amount of money in the economy to 20, but you still have ten loaves of bread. Well, now it’s $2 for each loaf, right?
“It’s twice as much, twice as much money buying the same amount of bread. And so right now, the Trudeau government is creating more cash with these huge deficits. Just this week, they announced another $20 billion of inflation they want to pile on. So the trick is we don’t need to create more cash.
“We need to create more of what cash buys, build more houses, produce more energy, and produce more food. So go back to my analogy. Here. We have pita bread. So imagine instead of doubling the amount of money, we double the amount of bread. You have $10. You had ten loaves of bread, but instead of doubling the money, you double the amount of bread.
“Now you have 20 loaves of bread for $10. What’s happened? Now the cost of each loaf of bread has gone down to $0.50 because it’s $10 buying 20 loaves of bread. So in other words, stop creating cash. Start creating more of what cash buys. Bake more bread. Isn’t that the solution?
“Yes. So we. To entrepreneurs like this. We need to get out of the way and off the backs of our farmers by getting rid of the carbon tax and the tariffs on their fertilizer and their fuels. We need to get off the backs of our truckers who bring the supplies to this wonderful establishment.
“And then we need to lower the taxes and reward the work of the workers here so that they can produce more of the food that we buy.”
There you have it, inflation explained in the simplest terms possible, straight from conservative prime minister hopeful Pierre Poilievre.
