We’ve been crunching the numbers, and Canada faces a serious problem—one that could hit the Canadian economy like a ton of bricks. While the U.S. economy shows early signs of real-time deflation, Canada’s economy is burdened by deep structural weaknesses that no one in power seems prepared to address.
When we listen to both Prime Minister Mark Carney and his likely replacement, Pierre Poilievre, their focus remains on large-scale projects. Yet the real problem is the disappearance or restructuring of Canada’s small and medium-sized businesses—the true backbone of the private sector.
Mark Carney appears dead set on pushing his Net Zero agenda, but based on our analysis, it’s difficult to believe he truly understands the private sector. If he does, it makes him look more corrupt than simply incompetent—unlike Justin Trudeau, who we genuinely believe had no idea what he was doing with the economy. Carney, on the other hand, has a plan, credentials, and the belief that he’s smarter than everyone else.
But Net Zero and ESG policies don’t even work in a surplus economy. Canada is in the worst type of debt—with over a million public servants whose pay and defined benefit pensions are tied to inflation.
The Core Problem: Inflation-Linked Public Sector
Imagine that every time inflation rises, over a million people automatically get a pay raise—even if they don’t produce anything of value to the real economy. Now imagine your largest trading partner’s economy is deflating. Where will the money come from? If your answer is stimulus spending, you’re partially correct. But what happens when borrowed money is being used to pay unproductive wages and pensions?
Why would anyone continue holding Canadian dollars under such circumstances? We’ll see how the Bank of Canada reacts as this reality becomes clearer, but the numbers are already pointing to disaster. Canada is the worst-performing G7 economy by our metrics—and the situation is even worse than reported. For example, Canada Post, which is effectively bankrupt, isn’t counted as national debt in the same way the U.S. Postal Service is.
We highlight Canada Post because it’s a textbook example: a massive liability with a union acting as though there’s an endless supply of money. Its defined benefit pension plan—indexed to inflation—is heading for insolvency. This means that the more inflation runs rampant, the larger the payouts retirees receive. Do you see where this is going?
The Political Illusion
Neither of Canada’s main political parties is running on an austerity agenda. Mark Carney is branded as the “banker who knows everything,” while Pierre Poilievre is sold as the “centrist” who will return Canada to the Harper years. But the truth is that the foreign exchange markets will eventually see the Canadian dollar as toxic once they understand they’re financing a bloated public sector without a robust private sector to sustain it.
Capital once flowed to Canada not simply because of lower taxes, but because investors could hoard the loonie and expect either a profit or stable purchasing power. Today, the opposite is on the horizon. The U.S. economy may be slowing down, but tariffs and policy shifts under Donald Trump make it smarter for businesses to move headquarters to the United States.
If Canada were to adopt an austerity posture, it might counter Trump’s economy. Instead, Canada has more tariffs than the U.S. and is pursuing an expensive Net Zero agenda.
We’ve stated repeatedly on this blog that the voluntary carbon market (VCM) is collapsing. Without government subsidies, it isn’t viable. Yet Mark Carney is forcing Canada to finance ESG projects. Unlike the European Union, which has constraints on printing money, Canada has no such limits—and Carney sees this as an advantage. But the cash flow is negative, not positive.
Negative Cash Flow and the Coming Sell-Off
The modern monetary system revolves around positive cash flow. If you’re cash-flow positive, you can safely print money. Canada is cash-flow negative, and we’re in the early stages of a demographic time bomb. Many public servants with defined benefit pensions are approaching retirement, and as we’ve often said, these plans are essentially pyramid schemes.
The foreign exchange markets may not grasp this immediately. Most technical traders don’t dive into a country’s financials; they just look at charts. But once those charts start trending downward, we foresee a sell-off of the loonie. We’re not predicting a collapse, but rather a revaluation of the Canadian dollar relative to its peers—an international market signal telling Canada to “get your act together” or face even worse outcomes.
When we talk about austerity, we mean massive structural austerity—the type that makes people cry. At this point, stabilization will be painful because so many public servants have their pay pinned to inflation and many are set to retire soon. Even buyouts won’t solve this; retirees will still have their pensions.
A CUPW representative once claimed “Canada Post can’t go bankrupt.” The expectation is clearly a perpetual bailout. But perpetual bailouts are exactly why Canada risks a loonie revaluation.
Final Thoughts
This is why we recommend you consider making Jesus Christ your Lord and Savior today. Putting your trust in mortal men will inevitably lead to disappointment.
To be clear, our view is that the Canadian dollar will likely trade lower because of Canada’s bloated welfare state and the money it’s expected to pay out to unproductive sectors. Unless Canada changes course, the question may soon be: Will it cost Americans $0.61 USD to purchase $1 CAD