Canada’s exports rose 2.8% in February to a record high, driven mostly by energy products, while imports climbed 3.9% (Prices continued to play an important role in the monthly growth of exports) – April 5, 2022,
Investing has become easy for many of us as of late, primarily because it’s pretty obvious the Canadian dollar relative to goods and services is losing value, on the fore market, the Canadian dollar has been making gains on the Greenback, but that doesn’t really say much, because all fiat currencies are losing their value to commodities, so when I read about exports rising I don’t feel anything, because how these numbers can be translated to a Canadian politician is that it’s okay to spend and regulate more because prior ideas are working when infact, all of these signs point to a coming recession.
t’s costing more to buy things domestically in Canada, driven by higher commodity prices, meaning that imports are more expensive, so although some see the price of exports rising, I’m looking at those import prices, because the average Canadian doesn’t benefit much from exports, especially if wages aren’t keeping up with inflation.
Canada has a diary cartel better known as our Supply management system which has too many government agencies to mention in this post and part of the arrangement is that these dairy cartels can raise their prices based on the inflation data, Canada has all sorts of price controls and tariff mechanisms in place, and the higher the price of imports, the more money the Canadian government collects in taxes and the higher prices get for consumers.
So whether it’s domestic or imported goods, continued consumer price inflation appears inevitable for Canadian consumers moving forward, and this makes Canadian investing for the foreseeable future pretty easy if you know what you’re doing. With that said, I do expect a pullback not because the government will stop spending, but because I can imagine the Canadian consumer changing their behaviors to adjust to the new realities.
But for me to argue I know what that change looks like? I can’t say, I’m not sure, you have to remember that not every Canadian is in debt. Debt servicing costs become harder when consumer price inflation rages on, so let’s imagine that you’re in debt and you were having problems SERVICING your debts, prior to the covid-19 outbreak, unless you get a substantial pay increase, servicing your debts is going to be even harder and this will be regardless of any interest rate hikes.
Regarding trade, prices don’t really mean in thing, because we’re on a fiat monetary standard, meaning that higher prices on both sides of the transaction could be the result of government manipulation. Under a Gold standard are some other standard that allows us to properly see what’s going on, prices play an important role. But I mean let’s be serious for a moment, the forex markets have a mind of their own, and government subsidies on the economy, so far have shielded Canadians from reality.
The current system is working, but the fundamentals are clearly fractured, so there are huge investment opportunities ahead. As I’ve been saying for about 3 years now, in my OPINION, we’re headed for austerity measures, I keep hearing people talking about a new monetary system, I comprehend their arguments as to why, but a derivative of a fiat monetary system would equate to permanent malinvestment, and pricing signals are already messed up as is.
Under a new monetary system, it’s hard for me not to imagine smaller businesses in the western world, changing their business models, in a manner that would destroy the quality of life, in western nations. It’s equally as hard for me to imagine a Gold standard, because sure the private sector can adjust, but most governments around the world are running deficits that they can only pay for as long as they have a monopoly on world reserve currency status.
Now, if let’s say the new monetary system is purely digital, I like to remind people of the reason why the U.S has world reserve status, it’s because the U.S dollar is the most DECENTRALIZED currency in the world. A CENTRAL bank digital currency equates to not only monitoring but the potential of the government shutting your money down. Canada under Justin Trudeau completely destroyed any hopes of a centralized digital currency.
It’s not to say central planners won’t try to implement a social scoring central banking scheme, but again, people accept the U.S dollar as the world’s reserve currency because of its DECENTRALIZATION, most criminals in and out of politics can take and spend their U.S dollars ANYWHERE. If money is centralized, humans will get creative, it’s just how the human spirit is built. So, it’s not to say the minions won’t accept digital currency, but humans will find different methods of trade, they may even start revolutions.
So for myself, all signs point to austerity measures, how long it takes us to get there is anyone’s guess, it could take a decade of CONSUMER PRICE inflation before the people say enough is enough.
Interesting times ahead!