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KARRINGTEN: Bitcoin’s economic case just got even better

As the Canadian and other governments print money at record levels, Bitcoin provides a modern protection against the looming inflation crisis.

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Of all the ways that the COVID-19 pandemic has changed our world, one of the most dramatic – although hidden – differences is that there is just so much more money. Maybe not in the lives of individual people, but our financial system is awash with an unprecedented tidal wave of cash being printed by central banks across the globe. Economic stimulus, or quantitative easing (QE), in response to the crisis is flowing rapidly, with Canada alone buying more than $4 billion in government bonds each month.

More money in the system translates to risks of much higher inflation. While we may not be seeing the full impact of the global hundreds of billions of dollars increased money supply yet, this is a fundamental principle of Austrian economics that has been validated time and again – without commensurate gains in productivity, the prices of our goods and services will increase with the rising tide of available currency.

The last thing our struggling global economy, with rampant unemployment, needs is higher prices on consumer goods. In the US, where the money supply ramped up 20 per cent over just six months from the end of 2019 to an astonishing $18.3 trillion, analysts have already started sounding alarms over the potential inflationary risks.

“It’s fair to say we have never observed money supply growth as high as it is today,” Morgan Stanley chief U.S. equity strategist Mike Wilson was quoted as saying, warning that this level of QE could come with unforeseen consequences. The Federal Reserve may not be in control of money supply growth which means they won’t have control of inflation either, if it gets going,” he added.

“People that want a safe haven store of value, for the next 10 to 30 years are going to attracted to a digital asset that has no inflation in it.”

Michael Saylor

That’s the terrifying thing about our financial systems – there is a genuine question as to just how much of them we really control. Despite the armies of economists, mathematicians and even quantum physicists behind our monetary policy, it’s far more of an art than a science.

The wrong shift in something like quantitative easing could, in the extreme, plunge us into the kind of currency devaluation that we’ve seen historically in places like post-WWII Germany and or 1990’s Argentina, where a loaf of bread becomes purchasable only with suitcases of cash.

It’s no wonder that alternatives to our dollar economies are starting to emerge, and moving forward faster than we’ve ever seen before. A whole parallel universe of digital currencies is emerging, and one is a clear leader. Restricted in supply and governed by the underlying technology – as opposed to politically-driven monetary policy – bitcoin is gaining momentum as a hedge against the devaluating buying power caused by inflationary pressures.

The key is that bitcoin is constrained in supply – the first truly scarce digital object ever invented. Just as gold and silver are limited through geological availability and the increasing difficulty of resource extraction, the algorithms behind the Bitcoin blockchain have a set number of 21 million coins, with additional electricity consumption and difficulty required to mine each BTC.

Compare that to our fiat currencies, which have no limitations on supply. There is a direct link between bitcoin hitting its recent all-time high of US $41,429 and the growing understanding the massive volume of stimulus – which is showing no signs of slowing down – could light the spark that takes our economy into a hyper-inflationary spiral.

“I do think Bitcoin is the first [encrypted money] that has the potential to do something like change the world.”

Peter Thiel

Big global players have made it clear that bitcoin is rapidly replacing traditional hedges like gold and silver, with JP Morgan recently describing the cryptocurrency as having high growth potential and the ability to compete with precious metals for preserving the value of capital.

A report leaked by Citi Bank in November of 2020 revealed its analysts’ lofty predictions for bitcoin in 2021, with a price target of US $318,000 by December – Bloomberg analyst Mike McGlone set a more modest goal of $100,000 by the beginning of 2022.

Major financial institutions aren’t just forecasting big growth, they’re also putting their dollars where their predictions are and moving a significant amount of their portfolios, like MassMutual’s $100 billion purchase, into BTC. Some of the world’s most wealthy billionaires like Stanley Druckenmiller, Ricardo Pliego and Ray Dalio have announced large purchases – Pliego, the second-richest man in Mexico, has moved 10 per cent of his liquid assets into BTC.

I believe that 2021 will also be the year that bitcoin overcomes one of its biggest challenges – it’s utility as a currency, as opposed to primarily a store of value. Paypal, Square and other payments services like Visa have developed new projects to make cryptocurrency more accessible as a low-cost payment method.

As bitcoin has gained mainstream attention and advocates like Michael Saylor, founder of tech firm and holder of nearly 80,000 BTC MicroStrategy, are starting to see their predictions come to life. Just a few years ago, it was considered risky to hold bitcoin on a corporate balance sheet, but Saylor believes that as a safe haven asset, it’s the new gold for businesses.

“Then you buy a bitcoin, you are buying a scare piece of property on a global liquid monetary network.”

Michael Waylor

He explained that corporations are now viewing cash as a liability, and in search of a new asset that will appreciate faster than the expansion of the money supply, they’re latching on to bitcoin in record numbers. In his view, the price of BTC could eventually replace indices like the S&P 500 or Dow as the primary monetary index.

Those are lofty statements, but they’re becoming more realistic every day. Out of our current crisis, we’re starting to see a new digital future take shape. Once the domain of a small community of investors, from multinational banks to billionaires, bitcoin is being embraced by the most mainstream of players in our economic systems. I don’t know if it will hit Citi Bank’s year-end target of $300K or not, but with the many benefits it provides, it’s clear that Bitcoin is the future of finance.

Koleya Karringten is a Guest Columnist
To learn more about this writer visit www.koleya.ca
Sponsored byBitcoin Well

Opinion

GIEDE: Why are Canada’s Conservative leaders so terrible?

“We conservatives are in dire straights if the most we can do is ape our opposition, and badly to boot.”

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Why does every Conservative leadership winner go on to be a colossal disappointment?

While most of us are still reeling from Erin O’Toole’s announcement last week of his carbon tax that “isn’t a carbon tax”, all I can feel is a sense of deep disenchantment. Like many social conservatives, I marked O’Toole as my second choice on the ballot, after Derek Sloan. I even wrote a column at my old digs telling others to do the same.

With the announcement of a carbon tax that goes into an O’Toole Petro Points rewards program, I find myself in the same position as people 30 years my senior, who recall scraping Mulroney’s stickers off their bumpers after the 1988 election. Was there ever any hope at all? Did O’Toole just get some bad advice? Or were we lied to the entire time?

Those of us who consider themselves loyal conservatives, feel a deep sense of personal betrayal.

But maybe we true believers need to open our eyes. The empirical evidence is there for all to see: centre-right parties in Canada and their leaders have not been the disruptors we elect them to be. If one looks to the past or to the present, most Canadian “conservatives” are just Liberals driving the speed limit.

Stephen Harper just finished addressing the rebranded Manning conference as a guest speaker, along with former British Prime Minister David Cameron. With US President Donald Trump safely out of office, both Cameron and Harper — clearly tapped to represent pre-2016 Toryism — exhorted the faithful to repent of nationalist populism, and turn to a conservatism more confirmable with global collaboration.

Some might argue retirement has changed Harper. But looking back at his government, the policy choices made weren’t boldly conservative: micro-targeted tax credits don’t fix our torturous tax code; scrapping the long gun registry didn’t stop nonsensical model and class bans — some of which happened under Harper — and the minor austerity that closed lighthouses and veterans affairs offices saved nothing compared to the colossal expenses of the CBC and equalization.

Our former Right Honorable needed to use those omnibus bills to radically alter Canadian government. He needed to stack the Senate instead of letting the seats go empty to be filled by his enemies later, and he needed to articulate a vision for his movement as well as the country. “Strong, stable, national, Conservative majority government,” looks great on a whiteboard, but it doesn’t mean anything in the real world and its means even less once a party inevitably losses power.

Let us turn now to our most prominent Conservatives leaders: premiers Kenney, Pallister, and Ford. Certainly, the COVID-19 pandemic is throwing them through an unexpected loop, but outside that, what about their leadership inspires? Did voting for Kenney get Ottawa to listen, or Ford to bring common sense back to the largest provincial government, or Pallister to reform school taxes on rural and agricultural land?

Premier Ford bringing Toronto to heel appeased his base and sent a clear message to urban latte liberals that no “creature of the province” was beyond being taken down a peg. Premier Pallister did fulfill his less-than-intelligent promise to lower the provincial sales tax, while keeping most distributive taxes high. Premier Kenney’s tough rhetoric victory in Alberta inspired all of us in the West in a moment of triumph, only to see most of the NDP’s policies continue with little harassment.

But in policy terms the only thing that Tories seem to know is austerity, which riles up front line civil servants, teachers, or nurses and kills voter support while making useless management teams bigger and richer. Friends and staff of the premiers always receive lucrative, noncompetitive contracts. And in the end, they normally fail to be tough enough to reduce the size of the government payroll in any meaningful way.

On COVID-19, “Conservative” governments have been the harshest, striping away liberties more often than their NDP or Liberal counterparts.

Danny Williams took down the Maple Leaf in Newfoundland to make a point, and Christie Clark played both the “pro-development” as well as “anti-pipeline” camps to gain concessions from Ottawa. Contrast this to our most “conservative” provinces; their citizens have no more liberties than anywhere else, their governments are no more efficient, and their leaders are no better at fulfilling the promises they make.

Which brings us back to O’Toole. If his solution to the questions around climate and revenue is to imitate Justin Trudeau with a policy that makes even less sense, why would anyone vote Conservative? Liberals may as well vote for the real thing, and conservatives have nothing to vote for at all.

Canadian conservatism is in dire straights if the most we can do is ape our opposition — and badly to boot.

Nathan Giede is the BC Political Columnist and Host of Mountain Standard Time for the Western Standard

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Opinion

FILDEBRANDT: There’s a lot more to O’Toole’s climate crusade than his carbon tax

“It’s an unforced error of historic proportions, that will likely cost the Conservative Party a historic loss in the next election.”

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Without consulting his caucus, party members, or the broader Canadian public, Erin O’Toole committed the Conservative Party of Canada to joining the centre and far-left parties in Parliament in their zeal to save the world from apocalyptic climate change. As of April 15, 2021, there isn’t a single party represented in the House of Commons that opposes a carbon tax.

Doubtless, there are many upset Conservative MPs who had things sprung upon them, but on the record, there isn’t a single MP left in Canada that publicly opposes carbon taxes anymore.

Most of the ink spilt over O’Toole’s big flip-flop focus on his plan for a consumer carbon tax that will begin at $20/mt, and increase to $50/mt (for now), and the fact that he lied about it all, after signing a Canadian Taxpayers Federation written pledge with the promise not to do just that.

Lost beneath the headlines however is a hard-line climate crusade plan that, until recently, would have been considered radical even by Liberal standards. The full Conservative climate plan document should be a terrifying read to those who aren’t prepared to see the oil and gas industry ride into the sunset, those who are concerned about increased government spending, or those who don’t like the government micro-managing their personal choices.

Let’s start with this nugget from O’Toole’s plan.

“This will put a price on carbon for consumers without one penny going to the government.”

This just isn’t true. Just below that nugget are a long string of multi-billion dollar spending promises, including:

  • $1 billion for building out electric vehicle manufacturing in Canada.
  • $1 billion for deploying hydrogen technology including hydrogen vehicles.
  • $3 billion for natural climate solutions focused on management of forest, crop and grazing lands and restoration of grasslands, wetlands and forests.
  • $5 billion for carbon capture and storage
  • $1 billion for Small Modular Reactors.

O’Toole promised his carbon tax wouldn’t actually cost Canadian taxpayers anything, but that’s an easy $11 billion in budgeted promises, and many more billions in the more ambitious, unbudgeted promises.

Theoretically, O’Toole may not pay for them out of revenues from his proposed carbon tax; he may just decide to pay for it out of general revenues by increasing government borrowing, which he’s promised will continue long into the future. In the absence of any moderately detailed financial plan presented by O’Toole, the only two plausible options are that this will be paid for by the carbon tax, or by borrowing. Neither should please conservative voters much.

As much as O’Toole insists his proposed carbon tax is not a tax — it is — he’s also proposing other bizarre new taxes that he doesn’t make any bones about calling “taxes.” The plan says the Conservatives will “[study] the potential for introducing new taxes on frequent flyers, non-electric luxury vehicles and second homes to deter activities that hurt the environment.”

21st century conservatism boils down to taxing people who like to fly or own a cottage. How O’Toole will determine which “non-electric luxury vehicles” fall under his new carbon tax regime is anybody’s guess. Would my pickup truck count? Would my wife’s SUV?

Doubtless, the luxury SUVs that Ottawa’s political elites are chauffeured around in won’t be any more expensive for their users.

Key to O’Toole’s tenuous claim that his carbon tax is not a carbon tax, is that instead of paying the tax into the government’s coffers, it will instead be paid into a “Personal Low Carbon Savings Account.” ‘PLCSA’ doesn’t have much of a ring, so let’s just call them “O’Toole Petro Points.” O’Toole himself likens his scheme to an “affinity or rewards program” in the document.

This is the single most bogus idea in the entire plan.

At present, provinces that do not have federally-approved carbon tax regimes in place are directly charged the federal government’s carbon tax. Ottawa — after a modest handlers fee — turns around and rebates some of it back to carbon taxpayers. It’s unfair. It’s re-distributive, but it’s at least simple.

O’Toole’s plan, by contrast, would initiate the largest bureaucratic growth in the administration of government since the introduction of the modern welfare state in the 1960s.

No details whatsoever are provided as to how this will be administered, other than a statement that it will be “managed by a consortium of companies as the INTERAC system is.”

That is, Erin O’Toole will appoint a few friendly bankers to to run the massive new bureaucracy, for a modest handlers fee.

The best that we can guess as to how this would be put into practice is Canadians would have to carry a new card in their wallets, to track the purchases O’Toole deems to be deviant behaviour. Using your MasterCard or VISA to pay for gas would likely lead to you paying the new carbon tax, but left ineligible to earn O’Toole Petro Points.

Alternatively, we may need to save receipts for every single hydro-carbon purchase we make and pay an accountant a modest handling to fill our new carbon tax statements every year.

No mention whatsoever is made of the massive indirect cost of carbon taxes, such as the increased prices of groceries or clothing. Or as Stephen Harper put it when he campaigned against Stehpane Dion’s carbon tax in 2008, a “tax on everything” that “will screw everyone.”

Administration of this program would surely breed untold miles of red tape. If administered by bankers as proposed by O’Toole, it won’t come cheap. The army of accountants taking up new residence in downtown Toronto would need to be paid, and it would almost surely come off the top of the carbon taxes that Canadians pay.

O’Toole’s plan includes a raft of other policies that meddle into private consumer choices and provincial jurisdiction, such as a requirement that “30% of light duty vehicles sold to be zero emissions by 2030”.

O’Toole says that, “Canada’s Conservatives will take this plan to the provinces but, unlike the current government, we will work with them, knowing that by doing so we’ll achieve more.”

Crazy thought here, but what if say, Alberta for instance decided it didn’t want to hop onboard their climate craze? O’Toole says he’s a nice guy, and can convince the provinces to all do his bidding. Trudeau said the same thing in his sunny-ways campaign of 2015. As it turns out, not every province will agree to go along with the latest federal program.

On one key front, O’Toole explicitly promises no change whatsoever from the Trudeau carbon tax, keeping the industrial (AKA: oil and gas industry) carbon tax on track to reach an incredible $170/mt. But it’s all good, so long as the tax is administered by O’Toole.

“We aren’t going to change the rules just for the sake of change. Justin Trudeau has already created far too much regulatory uncertainty, driving investment and jobs away.”

Trudeau is bad. O’Toole is good. Policies are the same.

The good news in all of this is none of it will ever happen. If somehow O’Toole managed to find his way into the Prime Minister’s Office, he would have next to no chance of implementing his carbon tax/Petro Points plan.

He would sit down with the bankers, and they would tell him, “That’s nice, but it’s going to cost a fortune if you want us to do it.” The cost would almost certainly be so prohibitive he would toss it back to the federal bureaucracy, at which point it’s now called a tax, even by O’Toole’s muddled vocabulary. In the end, O’Toole would be faced with the only practical pro-carbon tax option: keep Trudeau’s carbon tax in place.

Alternatively, he could admit the entire thing was a terrible mistake, and revert to his promise to repeal the Trudeau carbon tax. But he probably won’t.

It’s an unforced error of historic proportions that will likely cost the Conservative Party a historic loss in the next election.

Derek Fildebrandt is the Publisher of the Western Standard

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Opinion

MORGAN: Nenshi’s legacy leaves little to be celebrated

“Despite a decade in power and having the combined forces of the progressive media celebrating him throughout his tenure, Naheed Nenshi never managed to accomplish much that could be considered a positive legacy.” – Cory Morgan

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After roughly a year of playing coy, Calgary Mayor Naheed Nenshi finally announced he will not be running for re-election. I’m sure it was a tough decision for him. If nothing else, Nenshi is a vain man. He did not want to go out looking as if he was running away from his political nemesis, Jeromy Farkas, who is gunning hard for his job. Nenshi also would surely have liked to entrenched a solid legacy of sorts after having served over a decade as Calgary’s mayor.

Nenshi’s fear of potentially losing at the hands of an upstart won out over his desire to try and serve one more term as mayor and leave a lasting positive legacy. As it stands now, there’s little positive of which to speak.

Despite running, and being hailed as, a pro-business candidate for mayor, Nenshi’s term in office was markedly anti-enterprise. Massive year-over-year increases in business taxes led to a business revolt which brought even some of the most progressive of Calgary business owners to the steps of city hall in protest in June of 2019.

Meanwhile, city hall gave a $100 million fund to Calgary Economic Development (CED) and tasked them with using the money to draw new enterprises into the city. While CED has burned through more than $40 million of that money so far, their record of actually drawing new ventures into Calgary has been well short of successful. Calgary has been driving existing businesses into insolvency through tax increases while taking those tax dollars to try and draw in competitors to the remaining businesses.

Nenshi’s disdain for business leaders has gotten him into the legal trouble more than once. Taxpayers were forced to front the legal bill for a period of time while Nenshi was being sued by Calgary home builder Cal Wenzel, after Nenshi called him a “godfather-like figure.”

Nenshi embarrassed the city in a bizarre 2016 recording when he referred to the CEO of Uber as a “dick” and falsely alleged that the city had slipped known sex offenders through the uber screening process for Uber. This almost certainly flowed from Nenshi’s hostility to Uber’s challenge to the taxi monopoly, which has been a strong backer of his

Now Nenshi is now being sued by Calgary businessman Mike Terrigno for defamation. Again, for allegedly insinuating that he is involved with a certain Italian criminal enterprise.

Nenshi took it upon himself to turn Calgary’s downtown into a “world-class center.” The mayor made it no secret he didn’t care for the corporate and Western culture that built Calgary’s core. Millions and millions of tax dollars were poured into the city center, particularly in the East Village where a massive new library and music centre were built along with condo developments that had no parking available. Bike lanes and tracks took up valuable road space while city-controlled parking rates remained some of the highest in North America. The goal was to create a pedestrian hipster’s paradise in downtown Calgary. It was expected that people would come from around the world to walk around and admire Calgary’s hip and artsy, car-less core.

While Nenshi did indeed radically change Calgary’s downtown, few will claim that it was for the better. The atmosphere in Calgary’s core is ghostly as empty office towers stand over parks that have been taken over by addicts and the homeless. High taxes and parking costs drove downtown corporate businesses to outlying developments such as Quarry Park , while businesses on the street level simply went broke for lack of local clientele and accessibility. This trend has been ongoing for years. The pandemic and energy price crash only sped a process that was already underway.

Public art could have been a draw to Calgary’s core, but under Nenshi’s stewardship instead we saw expensive, ugly creations springing up on overpasses and in industrial areas. It became an almost annual tradition for the city to become enraged over some ghastly art project. Nenshi would condemn it and then repeat the cycle with a new eyesore somewhere else. He can’t point to fine art installations as his legacy.

Nor can His Worship be able to point to a unified and productive city council as a legacy of his leadership. While he promoted himself has the great renconciler, we have seen the most vitriolic and dysfunctional city council in living memory under Nenshi’s leadership. Nenshi even hired a psychologist in 2012 to manage a closed-door meeting to try and maintain order among council members.

While Nenshi promised a more transparent government since he became mayor, Calgary’s city council has spent more time hiding behind closed doors for meetings than any major city council in Canada. The meeting room where the council retreats for in-camera meetings has been labeled “the chamber of secrets.” The room has literally been equipped with lazy-boy style recliners so council members can stay comfortable during their extended sessions in hiding.

The Green Line LRT expansion has been in the planning stages for years, and seen its scope cut in half while the price continues to soar. The entire project is now at risk as people question the need to spend billions of dollars to increase transit services to an empty downtown.

Nenshi was outright giddy at the prospect of Calgary hosting the 2026 Olympic games. It was his chance for a lasting legacy. He would be able to cut ribbons for years and hobnob with top athletes from around the world. Tens of millions of dollars were spent in promoting the pursuit of the bid. Mary Moran of Calgary Economic Development was hired to promote the bid to Calgarians. To her credit, then-premier Rachel Notley told Nenshi no provincial money would be dedicated to holding the Olympics unless Calgarians got the chance to vote on the bid in a plebiscite. Calgarians overwhelmingly told Nenshi to put his Olympic dreams away.

More recently, the new arena deal with the Calgary Flames is at risk of falling apart. A hasty agreement for a facility was hammered out behind closed doors where taxpayers would be expected to foot nearly $300 million of the bill for the new arena. Now all work has been paused as the Flames organization has demanded another $70 million from taxpayers along with more land for the project. The cupboard is bare and citizens will be strongly reconsidering just how much they need an arena while we try to recover from the pandemic and the economic devastation wreaked by the lockdowns championed by Nenshi.

Now all that Nenshi can hope for in a legacy is that he hands off the role of mayor to his preferred successor. Jyoti Gondek has proven herself to be a close Nenshi ally during her term on city council, and with her mayoral campaign being managed by Stephen Carter, it’s not hard to see who Nenshi hopes will replace him in next fall’s election. It’s widely speculated Nenshi held back on announcing his intent not to run for re-election as a favor to Gondek. It is a form of running interference as contenders who didn’t want to take on an incumbent mayor stayed out of the field while Gondek worked to establish her campaign.

Despite a decade in power and having the combined forces of the progressive media celebrating him throughout his tenure, Naheed Nenshi never managed to accomplish much that could be considered a positive legacy. Calgarians will have an opportunity to bring in some fresh blood in the mayor’s chair and on council this fall. If they want to see a period of vision, growth and lasting legacies created, they will vote to turn over council.

Cory Morgan is the Alberta Political Columnist for the Western Standard

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