Canadian dollar Rises ahead of U.S Federal Reserve rate decision – July 29, 2019,
The Global monetary system as we know it, is about to change if Jerome Powell and the Federal Reserve make the mistake of lowering interest rates basically because Donald Trump told him too. Personally, if I were Jerome Powell I would leave interest rates unchanged, however, that’s not my job I’m not qualified and if Jerome wants to signal to the market that the United States is in trouble while President Trump is telling his followers how great the economy is, well that’s on him.
Even British economist John Maynard Keynes didn’t recommend manipulating the money system during periods of economic stability, however, Canada, who did not have a housing market crash when the United States had their 2008 housing market crash lowered their interest rates, thereby devaluing the currency to prevent Canadian dollar currency appreciation as the U.S economy reset itself from its economic woes. A large portion of Canada’s economy is based on paying for its public services with a devalued Canadian dollar, so if the U.S dollar is devalued and the Canadian dollar rises it becomes extremely difficult for Canada to lower consumer prices as well as make a profit exporting things to the United States.
The Cost of Living is a lot more expensive in Canada, Canada is, of course, more the Liberal than the United States, Universal Health Care in Canada as an example would have a hard time functioning if the Canadian dollar rose to high against the greenback and U.S exports into Canada all of a sudden became a whole lot cheaper, while exports from Canada became a whole more expensive.
Of course, the Canadian consumer would benefit from lower prices, but domestic Canadian companies would suffer because as an example Minimum wages all over Canada are much higher than the United States, furthermore Canadian businesses pay more taxes, people forget how incomes taxes work and other benefits for employees work, sure the employee has taxes extracted from their paychecks, however those taxes or benefits wouldn’t exist if there wasn’t an employer employing them. So in many respects, it’s the employers paying the taxes and the employees working to give the government those taxes. These words are often ignored by politicians when they ask the rich to pay more in taxes. Suppose the rich simply close their businesses and leave? I the government going jail them or nationalize their business? I say this because Trump is currently hell-bent on this concept of reciprocal trade.
Personally, I think Trump would be wise not to try and push the Federal Reserve around, but hey, Trump has pulled off some historic things I could never fathom, so maybe Trump has some tricks up his sleeve. The problem with the Federal Reserve lowering interest rates is that it will help to fuel poverty. Sophisticated investors know how to use debt as leverage, but the average Mainstreet investor typically uses debt to purchase consumer goods. Sophisticated investors already have been basically only investing in stock by backs, basically recycling money and charging more for it on the retail side, so lowering interest rates is going to have the effect that I anticipate will eventually lead to renegotiation of the U.S National debt.
Renegotiation of the U.S National debt will force interest rates up and it’s something that will happen once the market realizes that the economic recovery is a fraud. If the Federal Reserve engages in the buffoonery that the Bank of Canada and many other nations have already engaged in, this monetary system as we know it is going to be challenged. I’ve already stated many times that Bitcoin is a symbol of economic resistance. Understanding or investing in Bitcoin is an indication that you know we’re on a Fiat monetary system. Acknowledging Bitcoin symbolizes that enough people are watching the U.S dollar that if the wrong person becomes the President of the United States, that the global markets may intentionally make the U.S dollar volatile just to keep that President inline.
If the Federal Reserve lowers interest rates when it doesn’t have too, this is a horrible sign to the markets. The idea is supposed to be that the President and the Federal Reserve are separate. Trump’s big mouth has actually put into play that the President of the United States can control the Federal Reserve Bank. Interest rates are lower in Canada than they are in the United States, a lot of countries have been playing this game for a very long time, a lot of countries like Switzerland, Canada, the U.K, Germany all of these countries intentionally keep rates low so their currency doesn’t rise way above the value of the United States dollar, but why is this and how does the U.S benefit from this? Well, regressive taxation and tariffs are the names of the game for many parts of Europe and Canada.
Trump is slowly chomping away at these economic barriers and quite frankly, a breaking point is coming which would benefit the United States if Trump stayed away from the Federal Reserve. Now, Jerome Powell knows he shouldn’t lower interest rates, but I’m not sure what he’s going to do, the market is anticipating a rate cut if I were Jerome I wouldn’t leave rates where they are for the entire year unless there’s an unexpected market crash. Trump has done pretty well with all the adversary and I don’t think a rate cut is necessary, I don’t even know why he’s paying attention to rate cuts at this point especially being that he’s the tariff king as he calls himself. Well, tariffs take away currency manipulators.
Now, obviously Trump has been growing the size of government with his Mexico border wall, so I can see why he’d want to keep interest rates low, however in the long term barring some moronic Leftist doesn’t become President-elect, the U.S economy should be fine. A major reason why I think the U.S will have to renegotiate their debt has to do with the paying for pensions. That crash is coming and there’s nothing that can stop it, however, debt renegotiation can alleviate some pain. Deflation of asset values would bring prices down and raise interest rates, now for a country like Canada a U.S debt renegotiation would be our worse nightmare because our private sector isn’t as vibrant as the U.S private sector.
An America can move to a Republican State if the Democrat State they’re living in is too expensive, in Canada, there exists no such luxury. Saskatchewan and Alberta outside of those two provinces, Canada is Liberal run, even when you find Conservatives Premiers in Canadian provinces, looking at their economic policies, they often mimic the economic policies of many Democrat-run U.S states. Canadians don’t often move out of their birth province because there’s usually no economic incentive to do so. The advantage Canada has that the United States doesn’t have is Equalization payments which in easy to understand terms allows Canada’s Poorer Provinces like Quebec to extract money from Canada’s richer provinces like Alberta. This extracted money allows Canada’s poorer provinces to appear richer than they really are. Whereas Texas and Michigan will look like completely different countries within the United States because equalization payments do not exist.
The integrity of the dollar is not something you want to play with if you’re Donald Trump and in my personal opinion if the Federal Reserve lowers interest rates we could see a change in the global monetary system.
Canadian dollar rebounds from one-month low ahead of Fed rate decision – CBC
Interesting times ahead