The value of the Canadian dollar isn’t rising, the Forex Markets Really, Really hate Joe Biden! and The NDP really screwed up by uniting with the Liberal Party of Canada – October 8, 2020,
Now, let’s for a moment imagine that a higher valued loonie equated to deflating prices for the Canadian consumer, that would be fantastic right? Well, unfortunately, Canadians hoping for deflationary prices but keep on hoping and wishing, because the rising Canadian dollar won’t stop the debasement of our currency, in fact, it might accelerate the debasement of the Canadian dollar.
There is a minimum amount the Canadian housing market as an example will fall, Crown corporations such as Canada Mortgage and Housing Corporation (CMHC) and the Bank of Canada (BoC) are the equivalent of a minimum wage for our housing market, meaning that it’s basically illegal for the BROAD housing market in Canada based on current regulations to fall under a certain threshold.
Now, this isn’t me telling you to buy any house you can find, I don’t give financial advice, what I’m saying is that Canada is heading for a cashflow crisis. Now, it’s unfortunate that the Green Party made a socialist their leader because I really thought they had the potential to take away a lot of Liberal and NDP voters.
Maybe they’ll get those votes anyway, but The NDP I personally think just lost a whole bunch of future votes to the Liberal Party of Canada. I actually think that the Conservative strategy of appealing to Liberal voters is going to ultimately work, I’m not sure when it will work, but I suspect it will eventually work, but the Party on the outside looking in as the Leftist will be forced to consolidate their votes are the NDP, who by the way are now not only bankrupt as a Party but now gave fewer reasons for people to donate to them.
It’s hard for many Canadians to understand it now, but they’ll get it in the future, Canada especially if Joe Biden wins the 2020 election is headed for a cash flow problem. I personally call it “Late Stage-Socialism” which is a period in which governments are forced into austerity or debasement of the currency via accessive liquidity, which the intelligent people in the private sector probably won’t want because that borrowed money can’t turn a profit in the real economy and this type of situation is just messy and ugly to deal with.
Built into a market economy is the inability for governments to price fix forever, there comes a time where government inefficiencies are abundantly obvious, the market wants inflation and the governments assume as they did in prior times that printing money can solve the markets problem.
“Late-Stage-Socialism” is the period in which printing money comes with a very real cost to the Mainstreet economy, too much debt equates to debt servicing problems minimum wages are avoided in many Scandinavian countries, because government wages for their workers are often above the non-market minimum wage, this inflated tax governments collect via the minimum wage distorts what the government workers imagine their tax collection to be.
A minimum wage or a government wage and price controls equate to the government setting a non-market based bottom, now for big businesses, this isn’t a problem, but for the life-blood of the economy, this is a huge problem, because low wage earners feel inflation s do business owners, many of who finance their businesses via debt, if there’s a minimum for how far commercial or residential real estate will fall and there’s a barrier to entry to pay for an employee and if consumers can’t handle higher-priced items all of this leads to a CASH-FLOW -CRISIS! This means the government will have to basically subsidize EVERYTHING or engage in austerity measures = “LATE STAGE SOCIALISM”
The reason socialism doesn’t work is that the government is tasked with essentially regulating the entire economy, there’s no MARKET price discovery in socialism, that’s why socialist policies should be kept to a minimum, well if you’re not paying attention Justin Trudeau has taken an opposite approach, everybody and everything is getting a taxpayer bailout.
Canada better hope that America our largest trading partner doesn’t go into recession! Although I can’t predict the future, I think the Federal NDP made a huge mistake not calling an election! they’ve now embraced the Trudeau swamp, even the Bloc who had the most to lose by calling an election in the middle of COVID-19 called for an election, most people in Canada including many progressives who know how to balance a checkbook see the writing on the wall!
a rising Canadian dollar when the Canadian economy is reliant on an artificially low Canadian dollar is a recipe for disaster! The forex markets really, really hate Joe Biden, but one thing I can say with certainty is if Biden wins the 2020 election, the Republicans aren’t going to roll over and die, the Republicans will force gridlock in Washington and all of this will lead to a stagnant U.S economy, which is very bad for Canada.
Trudeau luckily had one of America’s best presidents for their economy in a long time, this benefits Canada and Trudeau greatly, but all good things come to an end. Trudeau’s spending has created a nightmarish scenario for the Canadian economy and well, you’d be wise to pay close attention to the upcoming U.S election results, because any form of gridlock in the U.S economy is bad, for Canada!
MacDougall: The NDP won’t become relevant by carrying Liberal water | ottawacitizen.com
Interesting times ahead!