Decentralized Forex Markets Continue To Reward Canadian Dollar: Will The Bank of Canada enact Negative Interest and screw over Canada’s Poor and Middle Class – May 21, 2021,
Ever since Joe Biden won the 2020 U.S election, I’ve been warning of a rising Canadian dollar. Because like it or not Canada, with the exception of freedom of speech which is currently under attack in Canada, Joe Biden is more extreme than Justin Trudeau, furthermore, Justin Trudeau has been paying for his spending with the inflation tax, whereas Joe Biden wants to pay for America’s debts more honestly by raising taxes.
I personally believe that tax is theft, but we live in a democracy, and the majority of people in my country based on their voting histories like higher taxes and the welfare state and they don’t mind paying the inflation tax as long as it’s a slow-rising inflation tax.
What most Canadians sadly even Canadians in the financial sector don’t seem to understand is that the Forex markets are DECENTRALIZED, meaning that a Canadian dollar right now actually has more value OUTSIDE of Canada. To better explain what I mean, if let’s say I was spending my bitcoins (WHICH I NEVER WILL) in Canada vs. let’s say spending them in Thailand? Would my bitcoins buy me more in Canada or Thailand? If you answered Thailand, you’d be right, because Thailand doesn’t have the welfare State Canada has.
The cost of running the Thailand government is a lot less than the cost to run the Canadian government, but running the American government if Joe Biden gets his way will be more expensive than running the Canadian government. Both Canada and America have signed onto Paris, however corporate taxes are cheaper in Canada, we have a better PRIVATE banking system than America has, we have resources in the ground, we’re known for our oil, and for the most part people trust us and have confidence in the Canadian dollar.
So if you’re trading forex dollars, at the moment Canada, looks pretty tasty, but what most financial analysts do is conflate the forex markets with the domestic economy because there hasn’t been much of any price deflation for Canadians who are forced to spend money in Canadian dollars in Canada.
Just because the Canadian dollar is rising doesn’t equate to lower prices for Canadians, in fact, the opposite is usually true, a stronger Loonie equates to higher prices for Canadian consumers, why? because we service most of our debt with inflation. Now I’m no fan of Justin Trudeau, but he’s still my Prime Minister and I have to tell the story for what it is.
Justin Trudeau is not the first Prime Minister to use the inflation tax to pay bills, Stephen Harper did it. The Canadian housing market never CRASHED! Now I can’t say Stephen Harper told former Bank of Canada Governor Stephen Poloz to lower interest rates, but Stephen Poloz lowered interest rates soon after being appointed by Stephen Harper, something Mark Carney was unwilling to do, by the way, Mark Carner was appointed by LIBERALS.
During the Obama administration, Joe Biden and Barack Obama bailed out corporations, instead of allowing the U.S economy to deflate. If Barack Obama wasn’t a Black Man this would have been considered Fascism, anyway, the markets never recovered, and interest rates never normalized.
During the Obama administration under the leadership of former PM Stephen Harper, the Canadian dollar began rising and rising to stop this rise from continuing the Bank of Canada under Stephen Poloz cut rates Tand sent the forex markets negative signals, the Canadian dollar began selling off. Although I think Stephen Harper may have orchestrated all of this to get re-elected, it didn’t work, and instead, Justin Trudeau didn’t only beat Harper, he beat Stephen Harper convincingly.
Even Canada’s biased mainstream media admitted that Justin Trudeau’s weakest point is the economy and it shows based on how Justin Trudeau spends public dollars recklessly, long story short not only is the Canadian economy weak, the cost to service it is now at historic highs, even though Canadians are less productive and via CERB/CRB actually making more money than they would have made if they were working for those Canadian dollars.
This obviously has massive inflation written all over it, but how I imagine the red-hot-inflation reaching Canada will begin with negative interest rates and a massive drop in the value of the Canadian dollar, which in my opinion is going to force austerity measures or push Canadians into a Central Bank digital Canadian dollar.
Now on the flip side of my argument is NORMALIZING interest rates, which I don’t see happening until the U.S Federal Reserve is forced to raise rates. Raising rates would be painful, unpopular, and would also force austerity measures because the cost to service the debt would spike.
I don’t think a digital dollar will work, because as proven with Bitcoin, digital dollars backed by nothing are volatile, and most NORMAL people seek price stability. Even in the event, digital dollars were pegged to the fiat dollar system, I assume digital dollars could also be taxed which would make them even more unattractive because not only would the subscribers be monitored by big government but they’d also be taxed for something they can’t withdraw from the system, and if money is backed by nothing and there’s a giant welfare State to bail you out(a digital dollar is a bailout) I think people will question why they should work for digital dollars?
I have friends in China, they hoard Cash, sure there’s a Digital renminbi, but a lot of Chinese people are still hoarding physical cash! They spend the Digital renminbi only if they’re forced to!
I personally see negative interest rates as inevitable for Canada at this point, Joe Biden has about 1 and a half years until the mid-terms, Democrats are fighting to allow Americans to vote without I.D there’s a lot of people moving to America illegally, it wouldn’t surprise me if Joe Biden wins the mid-terms in a landslide, which, unlike the Obama administration who needed the Republicans to spend, Biden might be able to spend as much as he wants.
Canada on the flip side does have some unity on the Left, but the Conservatives won the popular vote, and despite what some people think it looks like Maxime Bernier is taking votes not only from the Conservatives but also from the NDP.
This could equate to the people’s Party of Canada possibly getting 2 – 4% of all votes, meaning that if the Conservative Party repeats what Andrew Scheer did and all of a sudden The People’s Party of Canada gets a few seats, reckless spending might be halted in Canada, which again would strengthen the Canadian dollar.
The point I’m trying to make here is that if the Bank of Canada continues to do nothing, I suspect the Canadian dollar to continue to rise. The forex markets are decentralized and it’s a profit-driven market, Trudeau has unfortunately backed himself into a corner economically.
Current Governor of the Bank of Canada Tiff Macklem has been very accommodating to Justin Trudeau, even pushing for central banks to do more for climate change, the problem is that Canada even with near-zero interest rates can’t service its debt obligations with taxes, the “investments” Trudeau has made into the Canadian economy haven’t paid off and don’t look like they ever will pay off, but that’s a domestic problem that will create more poverty for Canadians in the future, the forex markets don’t care about Canada’s domestic economy, the Forex markets are DECENTRALIZED and profit-driven!
As long as Canadian dollars can be spent and there’s confidence in our money, the Canadian dollar will continue to rise and rise, unless Tiff Macklem signals to the forex markets that the Canadian economy is in trouble and you should sell.
From my view, I see Negative interest rates in Canada’s future! I also heard about Deputy prime minister of Canada Chrystia Freeland wanting to raise the FEDERAL MINIMUM WAGE to $15 this obviously will equate to more price inflation for consumers because as I like to point out, a minimum wage hike also equates to a wage hike for everyone else.
If I’m a manager at a restaurant who currently makes $15 an hour and all of a sudden entry-level workers are making $15 an hour, you’d better give me a pay raise that distinguishes me from these entry-level workers who have been propped up via the Government. This, of course, leads to a rise in the cost of living, and once wage costs are fixed, that’s permanent price inflation because if the business owner doesn’t raise prices they go bankrupt, and if they raise prices and customers refuse to pay the higher prices, the business could also go bankrupt.
Furthermore raising the minimum wage has never resulted in shrinking people’s dependence on government welfare, for some people, certain jobs are beneath them and if the government will pay them to do nothing, some people will take the government up on that offer and as I always like to remind people, if someone is on welfare or dependent on the government and they consumes more than they produce, they don’t care about price inflation, and why should they? They’re living off society for free! The only people who are affected by price inflation are the working poor and the working middle class.
This is why unless I see austerity measures, the world is headed for a great depression! This is sad because technology has created so much wealth and deflation that has been captured by Big government and turned into price inflation. Very sad times for humanity, however, I write these posts to hopefully wake a few of you up to do your own research!
Canada as I’ve been saying for years should be the RICHEST country on planet earth, there should be no close second. But in order for Canada to achieve this we’ll have to shrink government and I see too many Canadians who have a poverty state of mind, people who have a poverty state of mind hate individualism and prefer collectivism so knowing this you must be flexible and accept things for how they are and make financial decisions that make sense based on the current facts of the day.
Canadian dollar nears 6-year high as inflation concerns ease | financialpost.com
Interesting times ahead!