It speaks to how out of touch the members of this House of Commons are that they burst into laughter when I mention the struggles people like Matthew are having with inflation. Maybe they will not be laughing after they hear the whole story.
In Winchester where Matthew lives, he is seeing house prices skyrocket as cash is flowing into the system. Those with money have been able to bid up housing prices. Young people with less accumulated net equity cannot, therefore, make a purchase.
One family in a Riverside South community, not far from here, has been outbid nine times, most recently for a house that went $400,000 over asking price. It was a house that was listed for $800,000, and it went for $1.2 million. This family is losing hope of ever owning a home.
This massive increase in housing prices has coincided with the government's decision to pay its bills with printed money. The last fiscal year, the Bank of Canada lent $300 billion to the government, more than the government normally collects in taxes. This year, it is going to lend, at the present rate, $156 billion. This has increased the money supply by 20%.
What has that done to inflation? This month inflation has gone above the 2% target the Bank of Canada said that it would reach. Furthermore, specific items, particularly those items that the poor spend a larger share of their budget on, such as food, have gone up even more. Meat prices are up about 6%. Bakery items are up 5%. Vegetables are up 6%. Gas prices have gone up from $0.78 to $1.18, and of course, housing prices are up by 38%.
This is great news if someone is rich. If they have a $10-million mansion and their property value goes up by 38%, they have gained almost $4 million in net worth that they did not even have to work for, but if someone is in the working class, getting up every day and trying to build up enough savings for a down payment on a house through wages that do not rise as fast as housing prices, then they are out of luck.
Not only is it more difficult for them to afford that original down payment, but it is also now more expensive to rent because landlords pass on the higher housing and real estate prices to their tenants. That is the surprise and sneaky attack that the government is carrying out on working class people across this country.
What is the justification for all of this money being printed? Originally, the central bankers came to the finance committee and said not to worry as they were doing this extraordinary thing of buying up government debt and pumping cash into the system, solely to ensure what they called the efficient functioning of the market. Whenever they use indiscernible words they are hiding something.
We know that the market is functioning. Both capital and credit markets are flowing. The stock market actually rose and the TSX rose in market value above the size of our entire economy, about a fifth higher, in fact. That is something that has never happened in Canada in modern financial history.
As for credit markets, mortgage lending is up in volume by 20% year over year, which a massive growth, especially in a year when the economy actually went down. Clearly the market is functioning just fine.
Then the Liberals said they needed to protect the money supply. They did not want everyone to be afraid of COVID and stuff their money under their beds because they are afraid of losing everything and collapse the money supply in the process. That is not a problem either because the money supply has actually increased, according to the M2 measure, by 20%, just like the mortgage volumes.
Then the Liberals said they needed to make sure there is enough cash in the system. Households and corporations have cut $200 billion in the bank accounts right now, so that cannot be the justification. By the way, the households that have that cash are, of course, the very wealthy. They are the ones who benefit from these schemes, so that cannot be the justification for all of this money printing, nor can their last claim that they were trying to stop deflation.
The last three governors of the Bank of Canada said that it would be a disinflationary event and that prices would drop. We now know that was not true either. I said it a year ago and I will say it again, the Liberals' money printing is raising the prices. Inflation is now above the 2% target, with the Governor of the Bank of Canada admitting that it could go higher still in the next reported monthly data, so what they are doing is not fighting deflation.
What has motivated this? Let us look at the numbers themselves. Last year, the government's deficit was $352 billion. How much debt did the Bank of Canada buy? It bought $302 billion. Of the new debt the government issued, 85% was bought up by the central bank, effectively turning on its printing presses.
This year, on a Monday, the finance minister announced that she would have a $154-billion deficit. On the Wednesday of the same week, two days later, the bank governor said he was going to buy $156 billion. These guys over here are borrowing $154 billion and the Bank of Canada of course is lending $156 billion. Is it a total coincidence the two line up almost exactly the same and were both announced within 48 hours of one another?
Of course, the Bank of Canada is simply acting as the funding arm of the government. Because the government cannot control its spending, it is asking the bank to print the money instead, driving up the cost of living for working-class people like Matt. They deserve to own a house, to have food and clothing for their families, but they may not be able to afford it because of the inflation the government is driving.
This is an inflation tax the government is imposing. It is ultimately just like raising the GST. It applies to everything that people buy and makes life more expensive. It is time to get it under control.