It will cost Canadians at least $1.65 Canadian dollars to buy $1 USD in the very near future, regardless of who wins the U.S 2020 Federal Election – September 1, 2020,
I do not give financial advice! This post should be considered for entertainment purposes only!
As many people should be aware by now, the forex markets, don’t tell the entire story of what happens or what is happening within the borders of a country. In Colombia as an example, it’s an excepted practice for the Colombians to have hot potato money, meaning hoarding the Colombian Peso probably isn’t in your best interest, this is actually a practice through Latin America, primarily because of the laws that govern their fiat monetary system.
The whole point of fiat money is to prevent hoarding, now what does that mean exactly? Hoarding money leads to a stagnant economy by GOVERNMENT standards! Now since the New Deal in the United States, the U.S government has been growing at an enormous size, the difference with the U.S government versus the rest of the world is that the U.S government actually provides revenue to other countries in the form of safety.
The 2 main reasons the U.S remains the world’s reserve currency is it’s the ability to at least give the illusion of protecting other countries from foreign invasion. America is the world’s police, but not only is America the world’s police department, but it also has the most stringent CENTRAL BANKING laws on the planet.
Unless the Federal Reserve changes the structure of how it operates, all countries that wish to pay for the government via inflation taxes will take advantage of the U.S dollar by devaluing their currency next to it. I often write about austerity measures eventually coming to Canada, but with the Conservative Party making Erin O’Toole their leader, even if Conservatives beat the Liberals, it’s unlikely that the Canadian economy will see structural changes.
Maybe O’Toole will help out Western Canada a little, but O’Toole shrinking the size of the Canadian government is unlikely and the size of the Canadian government is going to be a huge problem moving forward.
Even if Joe Biden creates the Green New Deal, the Canadian dollar will still fall because it has too!
I’m a Maxime Bernier supporter, but I don’t see Maxime Bernier winning the next election, I’d love for at least 1 PPC member to win a seat, but even that’s a long shot, the Lib-Con monopoly will form government and if the Conservative Party of Canada wins, most likely the Bloc, the NDP, The Greens, and The Libs will form some type of coalition to stop the Conservatives from doing anything substantive.
The only help the Bloc will be to the Conservatives will be on immigration, and being honest, I’m not sure where Erin O’Toole stands on immigration, by that I mean, he looks like a flexible guy that will be open to negotiation if the Libs, the Greens and the NDP demand he increase those numbers.
I only bring up the following point to make final conclusions about the coming FOREX decline to the Canadian dollar which will happen after this CURRENT domestic debasement of the Canadian dollar. Have you been to the grocery stores lately Canada? Well, I remind you that the carbon tax is still in full effect the carbon tax is a big government initiative, it’s not talked about much anymore because on September 1, 2020, Covid-19 dominates the airwaves.
But the prices to bring food to your grocery stores has increased, now, the Canadian economy has also been given an artificial boost from the Federal Government via CERB, the Trudeau led government expects that money to come back into Government coughers, but I know my fellow countrymen and many of them used their CERB to invest or save, this is giving the Canadian economy an artificial boost as the numbers will appear to make it seem like the Canadian economy survived COVID-19 without a scratch.
But… as I’ve been writing about for months now, Canada is going to run into a cash flow problem that only the FOREX devaluation of the Canadian dollar can solve. Am I saying negative interest rates might be coming to the Bank of Canada? Sure, maybe, but there are a lot of other tools at the Bank of Canada’s disposal to make the Loonie unattractive in the forex markets.
Why does the Canadian dollar have to go down? the answer is simple EXPORTS! We have to sell the world something and Canada’s lack of productivity is going to put paying the bills of our big government at serious risk. Canda, unlike America, has more flexibility to print money, in America despite what people are told, the U.S Federal Reserve doesn’t print money, which is why pre-COVID-19 entire American cities were going bankrupt.
How often do you hear about entire Canadian cities going bankrupt? Not often right? Even though many Canadian cities probably would go bust if the Canadian dollar was backed by Gold. Well, in American banking CURRENTLY, a city can’t spend recklessly and anticipate an immediate bailout, because the Federal Reserve and the Federal Government are two separate entities.
The Bank of Canada as I like to point out is a CROWN CORPORATION! To give you an example, Canada Post is a crown corporation and in 2019, Justin Trudeau basically order them back to work! Keep that in mind when you think about the Bank of Canada.
Just so you comprehend my argument, the ownership of the Bank of Canada belongs to the Minister of Finance. Currently, the Minister of Finance in Canada is Chrystia Freeland. Many of us in the private sector or well aware that Chrystia Freeland bankrupted a department in a very prestigious company. Now, when most people think of the Bank of Canada they they think about the Governor of the Bank of Canada, who currently is Tiff Macklem.
Personally I think the worst bank governors are typically economists, it shocked me to find out that Tiff Macklem was an economist. Why economists make bad governors in my opinion is because they come into their positions with their own perceptions of how they believe things should be. Economists are usually FIXED in their beliefs.
Mike Carney as an example was an economist and Mark Carney at one point was thought of to be the next Finance Minister. Now, although many will say that Mark Carney helped Canada avoid the worst impacts of the financial crisis, I’d argue that Canadians have historical been diligent at paying down debt.
Canadians aren’t Americans and we don’t have access to the same financial instruments as Americans do, because the structure of our banking is different. The problem accelerated by Mark Carney’s stint as Governor was the housing market boom, which started under Carney but accelerated under Stephen Poloz.
If people remember, Carney cut rates, when the Europeans raised them, but there was nothing really genius about the move because the qualifications to get a mortgage in Canada still to this day remain rather stringent. Although there are barriers to entry into the Canadian housing market, many people have been tearing down those barriers for years and the problem is so bad in Canada now that WITHIN ONE MONTH of the Covid-19 pandemic, a lot of Canadians needed mortgage deferrals.
What this means is that Canadians don’t appear to have a lot of liquidity outside of their homes and obviously savings rates are low and a reminder that even some Canadians who are mortgage-free are struggling to make ends meet.
The lack of productivity in the job market, the high barrier to entry, and bank liquidity pushed to it’s maximum to the point that Canadian banks are reluctant to lend equates forex dollar debasement. That’s how they will make themselves whole, that’s who these bills will be paid.
Who cares who wins the U.S Election if you’re Canadian – The Good news about massive inflation to the Canadian dollar
I voted for Maxime Bernier to stop the coming disaster and I’ve also written countless posts warning Canadians about what was going to happen. With that said, I’m a capitalist and as a Christian, I also feel obligated to do my part as a Canadian to give some advice, some people might find useful.
Canadians not invested in the U.S may want to consider paying attention to what will happen in Canada because there are and will be a lot of money-making opportunities in liquid markets. Obviously inflation means an increase in asset prices, but inflation also means an increase in cash flow if you position yourself in the right markets.
The price of precious metals which probably will decline in U.S dollar terms will probably rise in Canadian dollars, this provides a huge opportunity for Canadians. Don’t be mad at Trudeau’s carbon tax, welcome it! consider positioning yourself in important energy positions in the Canadian economy, when Trudeau talks about a green initiative, pay close attention to where that money will go, the sad part of the carbon tax is that it’s going to hurt the poor the most, but you’ll want to pay close attention to what most Canadians CONSUME!
If you’re not a professional real estate investor, be very careful with debasing of the Canadian dollar because, unless there’s a law demanding that minimum wages are $20-$30 dollars, there will be fewer buyers to rent to and chances are provincial and municipal elections will be targeting landlords who the government will claim are price gouging consumers.
Forex inflation differs from domestic inflation and unless you’re a sophisticated real estate investor, you’ll find it hard to make a sizable profit being a landlord. Obviously commercial properties apply to this as well. The price of the Canadian dollar declining isn’t all bad, it’s only bad if you’re not prepared, so you’d be wise to prepare because all the numbers show that the Canadian dollar will be sliding.
Now in the short term, the Canadian dollar might rise, it’s actually been rising, but it’s because there’s a lot of noise with the U.S Federal election. I expect Trump to win, but Biden could pull it off. Now although Biden is bad for the U.S economy, Canada’s concern is that a stagnant U.S economy is a crashing Canadian economy, because after all, they’re our largest trading partner.
Now if Trump wins the election, as was the sea in prior years, Trump will have to talk down the U.S dollar, but a quick reminder that Trump is a tariff man and he’s made the U.S economy a more attractive investment, he’s also trying to take Canadian manufacturers from Canada and being that Trudeau is our leader 4 more years of Trump might be worth the risk for many Canadian job creators because even if a Democrat wins in 2024, there’s only so much a Democrat could do to reverse everything Trump would have done in 8 years.
So all of this is bad news for the Canadian economy, austerity measures won’t be happening in Canada, the Canadian government workforces will be paid, which means there’s a cash flow crisis in Canada, which means that bills will be paid by debasing the currency domestically and deflating the Canadian dollar on the forex markets, to date from neither the Liberals nor the Conservatives are there any talks of shrinking the size of government, I think 4 million Canadians are out of work and still being paid to do nothing.
Let’s imagine 3 million of those 4 million unemployed find jobs(unlikely), that’s still a shortfall for the government. It should be abundantly obvious to the reader what’s going to happen. Prepare yourselves accordingly and again.
I do not give financial advice! This post should be considered for entertainment purposes only!
Interesting times ahead!