There’s Nothing Embarrassing About Canada’s Ridiculous Housing Prices, What’s Unfortunate are The Government and Central Bank Policies Fueling The Price Growth – January 30, 2021,
Do yourself a favor and don’t convince yourself that Canada is a capitalist nation, because we’re not. You can make the argument that Canada has necessary Market components that prevent us from going into Hyper-Inflation and full-fledged government corruption but don’t trick yourself into believing that massive deflation will ever come to Canada under the current economic status quo.
Canada has a Welfare State which is far closer to Socialism than it is to Capitalism, what’s kept the Canadian and many other Western Nations afloat is the modern invention of fiat money which in reality has only been around since August 15, 1971. Which if you think about it wasn’t a very long time ago.
So a reminder that the current fiat model has 50 years to go before it reaches 100 years old and since the United States severed its ties to Gold convertibility, the last fiscal responsible U.S government was the Ronald Reagan administration.
For most people on the Political-Left Ronald Reagan next to Donald Trump was the worst thing to happen to America, but the reality of the situation is that Former U.S President Ronald Reagan via Former Chair of the Federal Reserve Paul Volcker were the best thing to happen to our current modern monetary theory.
Whether it was Lyndon B. Johnson Richard Nixon or Jimmy Carter the early days of fiat money were plagued with inflationary pressures. Paul Volcker changed all of this by allowing interest rates to rise, which in actuality gave the U.S dollar the ‘stability’ it enjoys today.
Now, the problem with the U.S dollar’s perceived stability is that it allows socialist ideas and ideals to run rampant. Because as an example, people are being rewarded for simply buying early. In a market economy, buying early doesn’t always equate to long term value.
If I as an example bought a television early in fear it would be more expensive later, my investment would be a dud. Many believe that real estate no matter what is always valuable, but that’s not true, even in Canada there are areas in which price inflation in the housing sector is scarce.
What’s happening in Canada is the overall cost of real estate is going up primarily because we have some cities which are popular destinations for real estate investment. The real reason this is occurring is because of artificially low-central-bank-interest rates as well the Canadian governments (Federal, Provincial and municipal) dedication to subsidizing the real estate sector with the expectation that the Canadian dollar will continue to be debased, to PREVENT DEFLATION!
If the Canadian dollar was backed by Gold, a lot of these real estate projects most likely wouldn’t be financed, if interest rates were normalized prices wouldn’t be so high as the buyers would fear interest rate fluctuations which they’d price into buying decisions.
But via the government, people investing in the Canadian housing market don’t even think like that anymore, they expect the value of their home will rise every year and they’re right to assume that. Now, as many people know the tech revolution is DEFLATIONARY, in fact, if Progressives didn’t ruin society, the Western World would be n 10 times better shape than it is today.
Lower prices and higher wages are here, what’s preventing people from enjoying their higher wages is the cost of government, which mal-invests and picks economic winners and losers. Currently and for the foreseeable future, real estate in Canada via the Canadian government will be the beneficiary of mal-investment and this will continue as I’ve stated until the government has a cash-flow crisis in which it’s overtly apparent will require raising interest rates as well austerity measures.
Interesting times ahead!