RATES INCREASE! Elastic Band Effect and What's Rotting in Denmark 

Remember when we were in junior high school and we took elastic bands and snapped them against our skin and did this to our friends?  Why would we do that?  Geez.  But that's not what I'm talking about here.

 Last week, on Wednesday July 12, 2023, right in the middle of most people's vacations, the Bank of Canada raised its rate.  Before that, we were holding our breath that they wouldn't.  We prayed.  We pleaded.  We Twittered and Facebooked. We went on TV proclaiming that the standard 'basket of goods' had indeed gone down in price.  But it was all for nothing. Anyone with a variable rate mortgage was going to get screwed over, yet again.

The Bank of Canada, in lockstep with the current extremely heavy debt load the current federal government is carrying, raised its rate.  Why?  Why on earth would they want companies to stop growing, lay off employees and cut back on capital spending?  Heck, we actually saw inflation going down.  We could feel it. It was happening!  
 A little, anyways.  In fact, just days later, most provinces reported a decrease in consumer spending and inflation numbers were noticeably down.  Should the Bank have just waited a few days?  Yep.  Why didn't they?  Do they not understand simple Economics 101 and the 'Elastic Band Affect"?  Heck, they just raised the rate 30 days earlier!  

I, along with conspiracy theorists, believe that higher interest rates now will actually make the Trudeau government look very successful during the election year when they lower the rate thus spurring economic activity and making the government look very good.   In fact, economists are predicting a lowering of interest rates in late 2024 into 2025 which, coincidently, is election time.  Hmmm.  Me thinks "Something is rotting in the state of Denmark". (Hamlet)