Canada’s Hidden Debt: Canada’s Supposedly Low Federal Government Debt Levels Differ Greatly From Governments of Canada Debt Obligations – April 28, 2023,
When someone like me writes about TRANSFER payments, I like to remind the readers that Transfer or Equalization payments in Canada are a redistribution of wealth from EFFECIENTLY run Canadian provinces to INEFECIENTLY run Canadian provinces.
The best part of equalization payments from the Federal government’s perspective is that it’s not counted on the Federal debt. Furthermore, if the Federal government is running a deficit, the Candian Federal government can simply borrow money to pay for the shortfall it transferred from the more prosperous province.
In the U.S., when the Democrats destroy a U.S. State, the Federal government can’t make that badly run state whole again, sure the U.S. Federal government can get creative to hide State competence, but it can’t blatantly reward it. This is why as an example, multiple parts of California an New York have descended into shithole status.
In Canada, you can see large pockets of poverty, but it’s not as pronounced in Canada as it us in America, as transfer payments often keep badly run Canadian municipalities and Provinces properly financed, thereby allowing Canada’s structural problems to worsen without being noticed.
One has to also point out that Canada’s immigration system is far superior to the United States; for the most part, Canada has a merit-based immigration system, whereas the United States, as of the time of me writing this, has an open-door immigration system.
What can’t go unnoticed, however, is Canada’s dependence on the U.S. economy as well as Canada’s ever-growing reliance on the strength of its currency. Canada’s Public Sector continues to grow while its private sector continues to shrink, but this would be hard to notice if one merely looked at Canada’s net debt-to-GDP ratio, which appears to be the best in the G7.
In the past, I’ve written extensively about Crown Corporations in Canada, which enjoy price controls in Canada and are not included in Federal Government debt obligations.
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All of these schemes on paper, look good until there’s an inevitable economic downturn. When I listen to the Conservative Party of Canada, which should take the reigns of power from the Liberal Party of Canada in the 2025 elections, I’m curious to know if austerity measures are on the menu or if the Conservatives will merely try to be better managers of the Canadian economy?
When Former Governor of Puerto Rico Luis Fortuño, decided to shrink the size of the Puerto Rican government, he acted IMMEDIATELY, he did not wait, and he EXPECTED to be fired in the next election. This is not a typical trait among politicians; most Conservative politicians tend to take the path of least resistance, wanting to be loved; most politicians will attempt to move slowly, trying to garner public support instead of ACTING.
Furthermore, when a new political party takes over, infighting is inevitable, and you’ll quickly get individuals within the party breaking ranks disagreeing with the agenda.
Why I bring this up is because Canada’s rapid decline will not be an easy fix, especially if the concept of the new government is to lower interest rates and basically keep most of the existing regulations and government positions in place to make their JOB NUMBERS look good.
In order to bring down the debt, structural moves need to be made, and I’m skeptical that this will happen with the Establishment Canadian Political parties. A lot of the new regulations proposed and enforced by Justin Trudeau as well as many of his new taxes, are easy to undermine.
However, The Conservative Party of Canada still supports crown corporations like Supply Management, and these entities revolve around PRICE FIXING, meaning that higher prices/consumer price inflation will remain once Justin Trudeau is gone, so the best The Conservative Party of Canada can offer when in power is inflation decelerating.
What I’m getting at here is that debt levels in Canada will continue to grow, and Canada will still find it difficult to build an economy that can pay down the debt. Because inflation also equates to an increase in welfare spending as well as increases to ENTITLEMENTS. Slicing welfare doesn’t appear to be talking point of any mainstream politican, which from my point of view equates to inevitable collapse or a much lower standard of living for the average Canadian moving forward.
Opinion: We’re deeper in debt than Ottawa lets on | financialpost.com
Interesting times ahead