A Recession during ZERP and QE means these Central Bank Policies failed: Recession, not inflation, will be the big worry in 6 months according to David Rosenberg – February 1, 2022,
Lately, I’ve stopped writing about negative interest rates, which I still think could be a possibility, primarily because I’m still of the opinion that the people will get this all wrong. I personally believe that once interest rates rise and inflation doesn’t stop, the Central banks will reverse course because raising rates in lieu of the failure of Zero Interest Rate Policy(ZIRP) as well as money counterfeiting Quantitative Easing(QE) will be clear signs of failure.
However, you’d only know QE and ZIRP failed if you have a basic understanding of their objectives. If money was backed by Gold QE would have caused hyperinflation, because you counterfeiting Gold is fools Gold and most people don’t want rocks that are painted a gold color, they want real Gold.
Understanding this, you’d know that QE was doomed to fail, but as most people know, ZIRP has little to do with raising asset values and more to do with saving the government from collapsing. ZIRP prevents austerity measures, let’s stop pretending otherwise. If interest rates are normalized, Trudeau can’t pay people not to work? Because the cost of servicing the debt in a normal interest rate policy environment would eat away at Ottawa’s ability to buy votes.
David Rosenberg of Rosenberg Research talks with the Financial Post’s Larysa Harapyn about how we’re headed into a bear market. He says recession, not inflation, will be the big worry in six months.
So, here we are, the potential for a wave of bankruptcies, while interest rates are near zero? Consumer price inflation going up and bad regulatory policies from Ottawa, who imagine economies fix themselves. One of the reasons many of us want sound money is because we don’t want bad ideas to flourish. Although we call it government spending, because there’s no return on investment, government spending should be called government investing. Well, Trudeau’s investments have resulted in shortages and consumer price inflation.
If we’re to be honest, we can’t blame covid for economic calamity, because it’s been the Canadian government’s response to covid-19 that’s causing economic hardships. Justin Trudeau also made a promise to climate change alarmists that he’d do everything in his power to destroy Canadian oil and gas, so consumer price inflation in Canadian energy is the result of government regulations.
Truth be told, bad policies coming from Ottawa, only accelerated recently, because more Canadians have become unproductive, but the writing was on the wall for years as manufacturing left Canada. The means of production is very important to liberty, if you give up your rights to be productive in favor of debasing the fiat money supply, you’re destroying yourself on multiple fronts.
Canada has found itself with a standard of living many of its citizens aren’t worthy of. We’re all supposed to do our part to the maintenance of this country. Well, the welfare state under Justin Trudeau has grown, and oh, by the way, public sector jobs are considered welfare-paying jobs. Most of the paychecks government workers earn, wouldn’t exist in a free market, meaning that Canada has a lot of bad pricing signals.
Making matters worse are the people who contribute nothing to this country or who have never contributed a net positive of earnings or value to this country, this is an additional drag on the Canadian economy, which if we lose our money printing priveledges would equate to default or hyperinflation of the Canadian dollar. Let’s thank the money Gods for the Forex markets, that reward the Canadian dollar merely because of perception.
Those of us who are productive, need not worry about the debasement of any money, because skills pay the bills, but government dependents are a cause of concern because they will become more open to tyranny, when the reality hits them, that the gravy train might be coming to an end. I like to remind people that Argentinians are for the most part unwilling to shrink the size of their government no matter how times the Argentine Peso becomes worthless.
Why I say this is that it wouldn’t surprise me in the least if Canada in the future embraces negative interest rates. Because I’m just letting the reader know, the Bank of Canada has no plans to battle inflation. I think the next rate hike will be a few basis points, last year’s inflation number was 4.7%(2021) the Bank of Canada has no desire to combat last year’s inflation numbers.
This gives you a glimpse that the Bank of Canada will be protecting the government’s best interests and this could accelerate poverty in Canada, resulting in a wave of bankruptcies while interest rates are STUCK near zero! We’ve never been here before and because there is no appetite for austerity measures, from my point of view, all signs point to confusion in the marketplace, which could easily be interpreted as higher interest rates(a few central bank basis point hikes) not working to stop inflation.
Interesting times ahead