Thursday’s federal budget was a commendable effort that plausibly forecasts a modest surplus in two years, along with a federal debt level that amounts to 28% of GDP (barely a quarter of where the corresponding U.S. figure will be). My own view is that the government should further stabilize the country’s finances by raising the sales tax on elective spending and cut the income tax (in a way that also serves to discourage income-tax increases by the provinces). But since the federal fiscal policy generally has been sensible since the Mulroney years, a steady-on course is not a bad thing — especially as the world around us hobbles toward the finish line in the 80-year devaluation of money.
An examination of the writing of a British 18th Century author such as Dr. Johnson, and a writer from 100 years later, such as Charles Dickens, reveals that there was no increase in that time in the cost of a loaf of bread or the rental of a simple but respectable residential room in London. There were soaring economic bubbles and bone-cracking depressions, and prices followed supply and demand, but the essential currency value was constant. Unfortunately, that would change: There was no way to pay for the appalling hecatomb of the First World War, where almost the whole populations of all the Great Powers except the United States and Japan were at total war for over four years, except to increase the money supply by printing more of it.