The BoC-CMHC collusion: How Justin Trudeau and other Prime Ministers caused a 112 percent rent increase in Saint John New Brunswick – September 5, 2021,
Although I’d like to point the blame squarely on Justin Trudeau, the reality is Justin Trudeau is too stupid to know what’s going on in Canadian housing. As a capitalist, I get offended whenever people refer to the monstrosity in Canada’s mortgage and rental government monopolies as a “Housing market”.
In a market economy, there’s this thing called “BANKRUPTCY”. When the virus that came from China hit Canada Justin Trudeau made the decision to not only allow rent and mortgage deferrals, but he also flooded Canadians with money he borrowed from the Bank of Canada. Now, had Justin Trudeau not done this the entire housing and rental markets would have gone bankrupt.
Now, for most people, they see this as a bad thing? When in fact it would have been a dream come true for most of Canada’s WORKING classes as housing and rental prices would have PLUMMETED! Despite what idiots in the media will brainwash Canadians into believing, in a market economy, a housing crash doesn’t mean that the Canadian dollar would lose value in fact the value of the Canadian dollar might shoot up during a housing crash because you can’t buy a Canadian home without CANADIAN FIAT DOLLARS!
To better prove my point, when the U.S housing market crashed, the U.S dollar actually rallied, borrowed money and PHYSICAL CASH are two completely different markets. The DECENTRALIZED forex markets do not care about domestic problems, as long as the Bank of Canada doesn’t engage in direct money printing meaning printing money without backing it up with any assets, the markets won’t care.
Not everyone is in debt, some of us are very much in a surplus position. and if you’ve been saving for a downpayment and let’s say all you have is credit card debt which is in most instances already at 19.99% you wouldn’t even notice a change if interest rates shot up or even went down, furthermore if we had a real housing MARKET what some Canadians are saving for a down payment might turn into 50% of their new mortgage, that’s a how a housing MARKET works.
In a housing MARKET, there’s something called DEFLATION, which happens when prices get too high or if people can’t pay their mortgage payment. a mortgage simply means you can’t buy your house in cash so you require a bank, insurance, or financial institution to help finance you. If the government got out of the housing market, prices would COME down, interest rates shouldn’t be based on politics, interest rates should be based on the demands of the market.
There are millions of EMPTY condos and housing in Canada, why? Because of guaranteed artificially low mortgage rates, which actually helps to raise the value of a person’s home or rental property. When interest rates fluctuate the way they’re supposed to, people who are over-leveraged have to sell what they can’t afford.
If you think that’s cruel and inhumane? you clearly don’t give a shit about the homeless or Canadian families who are paying 5 times the amount of rent they should be paying had this BoC, CMHC collusion never existed.
Real estate investing is big business, it’s always been big business, but the RENTAL CONTROL laws are the main reason why rental housing stopped being built, and rental prices began rising due to lack of supply
Real estate investing like it or not is still a business and if the PROVINCIAL government creates a rental control law, fewer investors will build rental housing especially when the CMHC rewards them for building Condos, why? Because rental controls are a cap on earning potential. So let’s say I’m a real estate investor/developer and I have an apartment building, things break in apartment buildings all the time, but the Provincial and municipal government tells me, I’m not allowed to raise rents on my current tenants to pay for the rising costs to operate my real estate business? Will I build any more rental property? The answer is probably NO!
Now, to cure this rental control problem the Canada Mortgage and Housing Corporation(CMHC) decides to get involved in the mortgage insurance market because you know, why should Canadians rent when they can become homeowners?
Well, CMHC by using its mortgage insurance product now gets involved in the real estate market, and it begins picking winners and losers and because the CMHC will go bankrupt if the Mortgage prices collapse, the Bank of Canada gets involved in protecting the CMHC.
Adding fuel to the fire Canadians decide “What the Hell” – let’s make someone who is clearly unqualified Prime minister of the country, and this idiot we now call Prime Minister says to himself, interest rates are really low, this is a good time for the Liberal Party of Canada to buy as many votes as possible, so…any chance this moron gets he borrows money from the Bank of Canada to finance his spending, thereby putting more pressure on the Bank of Canada to keep interest rates even lower.
What the idiot Prime minister and his idiot supporters don’t realize is that prices for goods and services are going up, because with every Canadian dollar circulating in the Canadian economy purchasing more goods and services, fewer goods and services are being produced, because money is supposed to be tied to labor and when money is not tied to labor, people who shouldn’t be able to consume things like REAL ESTATE are allowed to purchase real estate because the housing market has been replaced with a housing monopoly.
When the government borrows money, and interest rates are left artificially low, ASSET prices(real estate) go up in value which makes people richer for doing absolutely nothing The working-class Canadians get screwed over by all of this and the end result is rental prices and other prices begin shooting up.
Bankruptcy stops this from happening, but when the government makes bankruptcy illegal for some segments of the population, you get all sorts of market distortions.
In a market economy, if there’s a rental or housing market, people are punished for taking on too much risk. In the piece of shit economy, we have today, Justin Trudeau with the help of the Bank of Canada(BoC) and the Canada Mortgage and Housing Corporation(CMHC) collude together to make sure that the market reacts in a manner that makes politicians look good.
To those of you curious as to why the western world continues to move further Left politically it’s because dumb ideas are being rewarded, if you pay or reward people to do stupid shit, expect that they will continue to do stupid shit.
How this relates to Saint John’s New Brunswick, some people aren’t afraid to show what’s really happening in the real estate market. One of the reasons I’m not a real estate investor is because most of the poorest people I know are HOUSE RICH! Their house looks better than mine, but they don’t have the freedom I have, I go where I want when I want, I don’t play those silly real estate arbitrage games. Most of the people who do are stuck and desperate and they’re going to feel the wrath of the same idiots who caused this disaster.
To those of you thinking about getting into real estate investing, remember that’s it’s a heavily regulated industry and when things go bad, the politicians will always side with where the majority of votes are! The housing market in Canada is such a mess and I expect things to get a whole lot worse before they get better.
Interesting times ahead!