Trudeau’s dangerous economic experiment will burden Canada for years

One of the "features" of the modern world is the possibility for mistaken policies to be perpetuated for a long-time without the true consequences being felt.

This is a combination of rapid increases in technology – which creates many opportunities for alternate economic activity to circumvent government restriction – and the coordinated actions of central banks to tacitly encourage rapid increases in debt.

Central banks have simply decided that they will enable continued government deficits with policies that do not allow interest rates to rise as they would be expected, given the circumstances.

As a result of these circumstances, the Trudeau government has been able to simultaneously increase Canada’s debt while implementing anti-growth policies without the severe damage from that combination from being felt as aggressively would otherwise be the case.

However, reality can only be evaded for so long.

It is like someone who has a serious illness choosing to simply inject themselves with steroids repeatedly, rather than seeking treatment.

Sure, they will feel great for a while – they may feel even better than normal – but they would still be sick, and they would pay the price sooner or later.

By contrast, seeking treatment would feel more difficult in the short term, but keep the person alive and healthy in the long-term.

When you think of our economy, you can guess which strategy the government is currently following. We have seen rapid increases in debt before, and we have seen governments increase spending in response to a crisis.

But we have not seen those things happen while a government seeks to restrict economic growth and crush a key sector of the economy the way the Trudeau government is trying to cripple the Western Canadian energy industry. Usually, when a country takes on a massive increase in debt, they seek to boost growth to make that debt increase affordable.

In short, what we are seeing is an economic experiment being pushed by a government that seems to believe "things are different," and that usual economic rules do not apply.

"Interest rates are low," "we can print our way out of debt," "deficits don’t matter," and "growth is overrated" all seem to be the maxims the government is operating under.

Believing one of them may be okay for a government, but believing all of them is disastrous.

Of course, we have seen this kind of thinking before, all throughout history.

Countless governments have been absolutely certain they were the ones who could evade reality, that things truly were different,’ that the economy could be endlessly manipulated, and that central authority could better manage things than the choices of individuals.

But each time, those experiments ended in failure, because reality can be evaded for a while, but not forever.

And like under a past government run by a Trudeau, Canada will face an immense burden of stagnation, debt, and economic pain due to this dangerous experiment, and every year it goes on will add to the struggle Canadians face.