Poloz to Queen’s University Debt Slaves: Don’t Worry About the “Poverty Effect”

Poloz to Queen’s University Debt Slaves: Don’t Worry About the “Poverty Effect” 

Written by Peter Diekmeyer, Sprott Money News


Kingston – Bank of Canada Governor Stephen Poloz got a warm welcome following a key policy presentation at his alma mater last week.

“These are exciting times,” Poloz told a large crowd at Queen’s University “Students here will shape the future. I cannot wait to see how it turns out.” 

Afterwards, during a press conference with local and student media, Poloz brushed aside speculation about a possible “poverty effect” caused by rising interest rates. 

Poloz cited a strengthening Canadian economy and downplayed suggestions that central bank rate-tightening cycles—which crashed global stock markets in the early and mid-2000s—would do so again. 

Yet while the extent of a “poverty effect” in the overall economy may be open for debate, there are growing signs that central bank actions are impoverishing Canadian youth. 


Trickle down central banking

During the 1980s, economists derided US President Ronald Reagan’s policies—which cut taxes in the hope that they would spur economic growth—as “trickle down economics.” 

Yet the Canadian government has adopted similar tactics.

The Bank of Canada’s “wealth effect” policies are intended to drive up asset prices in the hope that richer consumers will spend more, thus boosting the overall economy. 

For example, if a Queen’s University economics professor sees his stock portfolio double, he might then buy extra lattés at the campus Starbucks, thus creating more jobs. 

Sadly, the wealth effect hasn’t been working for the country’s youth— 44% of the 4.5 million Canadians aged between 15 and 24 are out of work. 

Worse, trickle down central banking requires constant borrowing, at a pace faster than GDP growth. 

As Renaud Brossard , executive director of Generation Screwed noted recently, such policies stick Canadian youth with nearly all of the country’s debts. 


Destructive preservation

In his Queen’s speech, Governor Poloz highlighted one of the free market’s most important qualities—what Joseph Schumpeter called “creative destruction.” 

This is the process through which markets kill inefficient businesses and create job and entrepreneurship opportunities, many of which are exploited by youth. 

“By far the most potent form of business investment is the creation of brand new companies,” said Poloz. “As successful firms exploit new technologies, they can grow very rapidly.” 

Yet the Canadian government’s and its central bank’s actual policies amount to “destructive preservation.” 

Ongoing bailouts of government, banking, automotive and other privileged sectors have entrenched corruption, incompetence, laziness and greed. 

This can be seen concretely in the public sector, where politicians and bureaucrats continue to pay themselves salary increases as Canada teeters on the edge of bankruptcy. 


From “fine tuning” to Human Action

The most corrosive effects of government policies have been on the country’s culture. Ironically, it’s economists that are driving much of the rot. 

Queen’s University academics teach that Canadians are a big collective, one whose activities can be “fine tuned” by government tax policies and central bank wealth transfers. 

They don’t teach Ludwig von Mises’s banned work “Human Action.”

In this eponymous classic, Mises taught that the way to understand economies was to study individual “human action”—not groups. 

Mises recognized that people don’t like to be fine tuned.

He identified early that the first people to react would be economists themselves, who would say whatever was needed to protect the special interests they represented. 

Queen’s University students can see this most clearly in widespread manipulation of GDP , inflation and other economic data, which for example show the youth unemployment rate at 10.9%, one quarter the actual total[1][1].


The pig that ate the kitchen

A way to think about Canada’s economy is like a pig that eats all the food in a kitchen. If you get hungry, all that’s left to eat is the pig. 

In Canada, that pig is government, which now consumes and redistributes half of the country’s GDP. 

This has spurred the growth of a huge, but quiet, government, academic and special interest complex, which protects each other’s interests, jobs and funding. 

It’s a big club. But younger Canadians aren’t in it.


Poloz to Queen’s University Debt Slaves: Don’t Worry About the “Poverty Effect” 

Written by Peter Diekmeyer, Sprott Money News



Check out these other articles by our contributors:

Standing Ready to Lease Gold - Keith Weiner (19/03/2018)  “Makes me sick… I’m hoping he has to eat the words.” — Eric Sprott on the US’ new chief economic advisor (Weekly Wrap-up, March 16, 2018)The Race to Repatriate Gold Reserves Accelerates - Nathan McDonald (15/03/2018) Are You Ready For The Next Rally In Silver? - Craig Hemeke (13/03/2018) 




TheSilentMajority silverer Tue, 03/20/2018 - 10:53 Permalink

Oh Chinadastan, nobody stands on guard for thee anymore.

Chinadastan needs QE eh.

A once-great nation bankrupted both culturally & fiscally over the last 50 years by successive traitorous short-termist politicians and the naive idiotic sheep that voted them into power.

Their taxes keep going up each year, their debt keeps rising each year, and yet their infrastructure and public services get worse and worse each year.

Imagine that, hero to zero in only 50 years!!

Who can make Chinadastan great again????

In reply to by silverer

CStanford Tue, 03/20/2018 - 09:44 Permalink

Canadians between the ages of 15 and 24 should either be in high school, college, trade school, or some sort of apprenticeship (the latter might show up in employment stats).  I'm not shocked at all that half the kids between these ages are unemployed because they are probably unemployable.  Get a degree or learn a trade, learn how to do something, then get a job.

austrianboy CStanford Tue, 03/20/2018 - 10:08 Permalink

Not sure about that.

I have plenty of friends who went to work at 16-17 making $20-$25 in car industry or in the railway yards the late 1970s and early 1980s.

They all bought sports cars, got the best girls and laughed at us idiots who went to university.

Most kids learn nothing in school and are only there because they can't find work.

In reply to by CStanford

Sweet Cheeks CStanford Tue, 03/20/2018 - 10:56 Permalink

Correct. Many kids are unemployed because they are unemployable. 

Students spend 5-7 years running up debt and having a good time to get worthless four year degrees in gender or racial studies and are shocked to find no one is hiring. As long as the government is involved in student loans, this will not change because no one is asking those kids, “how are you going to pay me back?”

in the meantime, hundreds of thousands jobs remain unfilled because people can’t get pass a drug test or get to work on time or are too good to learn a trade.  

Austrianboy proves the point.  Those snowflakes willing to get their hands dirty and display good work ethics make good money right out of school without a university degree. 

In reply to by CStanford

nscholten Tue, 03/20/2018 - 10:58 Permalink

In the US back in the 1980's and 1990's those kids that went to collage and then to work for Microsoft got all the chicks.  Gals would check your hands to see if you were blue collar or not.

nscholten Tue, 03/20/2018 - 10:59 Permalink

Canada was gutted years ago just like what has been occurring here in the US.  The turn around (if there is one) will be ugly but necessary.

Anon2017 Tue, 03/20/2018 - 11:44 Permalink

"For youth aged 15 to 24, both the level of employment and the unemployment rate were little changed in February. On a year-over-year basis, their unemployment rate declined by 1.3 percentage points to 11.1% as fewer youth searched for work." From the actual StatsCan report. Aren't the folks at Sprott embarrased to put out gibberish like that?

peterdiekmeyer… Anon2017 Tue, 03/20/2018 - 12:02 Permalink



Great eye. I was wondering if anyone would catch that.

You were the only one.

In fact the article included a link to the Statscan data for anyone to check.


There are 4.4 million Canadians between the ages of 15 and 24.

2.4 million of them are working either full or part-time.

2.0 million of them are not working.

I define that as "unemployed."

Hence an unemployment rate in excess of 40%.

Statscan (like the US stats people) naturally plays around with the data to make things look better.


These are my views and do not reflect the opinions of any of my clients.




In reply to by Anon2017

MaxDemon peterdiekmeyer… Tue, 03/20/2018 - 16:49 Permalink

But that is the catch, in the political world "unemployment" means something very different, and that meaning has been "tweaked" many times over the last few decades.  The word, as used officially, is now almost meaningless.  Consider that it is now not just possible, but likely that both employment and "unemployment" go up or down at the same time.

In reply to by peterdiekmeyer…