Deflation, Money Printing Economic Trouble for Quebec and Canadian economy: U.S. aluminum producers are pushing for tariffs on Canada – June 17, 2020,
I personally see the Canadian economy heading in a direction that will see real inflation in the future. The value of the Canadian dollar on the global markets will have little bearing with inflation domestically because Justin Trudeau’s cabinet has been spending money it doesn’t have while at the same time overly regulating the Canadian economy.
A quick reminder that the carbon tax still exists, thank God for Donald Trump who we all know in the markets has been the main reason why the price of oil is so low. Russia and Saudi Arabia have their dog and pony oil show going on, but underneath it all is Trump doing what he can to keep the U.S economy afloat, which is great for Canada, because lower oil prices have made it seem like carbon taxes aren’t that big a deal.
One of the main reasons the Canadian dollar remains low is that Quebec and Ontario require it in order to be competitive with U.S companies. Our labour oddly enough isn’t overpriced, but our government workers are and a lot of the tax dollars Canada’s bing government consumes comes from manufacturing.
Quebec’s government, if it were to be an independent nation, would resemble Argentina, and more than likely within a decade the Quebec dollar would experience hyperinflation if it were to maintain the economic policies it currently has.
With that said, as the global economy deflates, more companies will be fighting to chase the same money, because of Trump’s policies, money is flooding into the U.S and because Canada hasn’t really lifted its own tariffs, a topic ignored by the article I point to below, Americans have a genuine grievance against Canada’s underpriced aluminum, which American companies will bring to Trump’s desk during the election cycle.
This could simply be posturing, but this is the problem you run into as a country when you subsidize big government, with dirty trade tactics. A quick reminder to the reader, that the Canadian dollar is intentionally undervalued to pay for public services, the reason Canada has o devalue the Canadian dollar stems from our inability to pay for the size of our government.
Canadian labour isn’t cheaper than U.S labor, in fact Canadian labour has proven to be better than U.S labour, Canada could and should be viewed as the Germany of the America’s, what happened you ask? Labor unions, labour culture, most of the labour unions in Canada, only lobby government, in many European countries, their labour unions provide actual value not only to their workers but to society as a whole.
In Canada our labour unions lobby government, a lot of the laws already in place in Canada make most labour unions useless, but the average Canadian unionized worker doesn’t know this and there comes a time in which Canada might become a main target for U.S manufacturing.
Usually, it’s the Democrats that use tariffs, Trump is a republican and he’s now made the word tariff a household word for American workers. Even in the event a Democrat wins, the workers in particular industries might demand tariffs on Canadian companies to be part of democrats getting their vote.
If Joe Biden doesn’t win the upcoming election, what this signal is that the socialist democrat idea in America is dead! This would mean that the next Democrat candidate in 2024 would most likely by fiscally conservative which means they will use tariffs to protect jobs.
Trump is not a Republican he’s a populist and his policies are popular, but if you remove the negative emotional feeling Liberals experience when they see Trump and peel back all the layers, Trump is more Democrat than Republican. Why I say this is because I think Canadians politicians are underestimating how bad things are at home, again thank God Donald Trump is president, because a lot of the damage Justin Trudeau has done to the Canadian economy hasn’t been felt yet, because the U.S is after all Canada’s largest trading partner and the U.S economy even during COVID-19 is still booming!
In real terms the global economy is deflating, but most central banks are still printing and our federal government is still borrowing, so what this usually means is bankruptcies will be on the rise in the not so distant future, because most of the borrowing is going to paying down debt and Canadians will be trapped in this cycle as prices begin to rise and productivity continues to disappear!
Justin Trudeau extended CERB which is a tax on citizens because the money he borrowed and because the barrier to entry into the Canadian business market is high, during a deflationary period it’s going to be quite the challenge for new companies to replace the old ones, it’s not to say it won’t eventually happen, but this will be a transition period and who knows how long it will take and how many financial hardships it will cause.
Interesting times ahead