The Forex Markets Continue to Reward The Canadian Petrodollar as it makes gains on the Greenback, Massive Inflation, and Negative Interest Rates Are Coming To Canada – May 18, 2021,
Regardless of the Canadian government’s balance sheets which clearly show Canada will struggle to SERVICE its existing debts the forex markets continue to reward the Loonie, which as many people know is still viewed as a commodity-based currency. The assumption is that if things get really bad Canada can simply get back to the business of producing commodities.
My counter to this argument is that Canadians are not mentally prepared for austerity measures, which tells me that the cost of living is going to skyrocket in the coming years if government services and government regulations aren’t cut. Now, it’s unlikely that neither the Bank of Canada nor Canada’s Liberal Government see what’s happening, but the Canadian dollar is rising in value next to the Greenback, and prices Canadians pay in the grocery stores are also rising? If the Canadian dollar is getting stronger shouldn’t consumer prices be deflating?
Do not confuse the Forex Markets With Canada’s Domestic Economy
Did you miss that? The forex markets are giving the Canadian dollar a higher value, but yet in Canada, the Canadian dollar is being DEBASED. I’ve been making this argument for years, that Canadian dollars will be better used outside of Canada and this spells economic doom for the Canadian economy in the coming years.
I have to call it for what it is, Joe Biden and Kamala Harris are by far the dumbest and most unqualified individuals I’ve observed to ever be heads of State in America. Joe Biden struggles to complete a sentence and Kamala Harris looks uncomfortable in her own skin.
Although Canada is actually worse off financially, we have an equalization formula that nationalizes the economic data of each province. Western Canada is paying all of the bills, the rest of Canada is INSOLVENT, and I’m not only talking about the debt, I mean insolvent in the sense it couldn’t even service its existing debts if it was forced to pay its bills via taxation ONLY!
In America, the equalization model doesn’t exist which is why you’ll observe stark contrasts State to State in the quality of life. In Canada, regardless of the bad policies, each Province on the surface appears rather uniform, where this becomes problematic is during an economic downturn.
If the Canadian dollar continues to strengthen Tiff Macklem similar to the U.S Federal Reserve Chairman Jerome Powell will be faced with something, most central bankers will never experience in their lifetime. The decision to deflate or possibly hyperinflate their currencies.
With Canada, it would be wise for Tiff Macklem to stand pat and let inflation run red hot and wait for Justin Trudeau to take the blame for inflation. But I’m not sure he has the stomach to do that because how this works is prices are going to keep rising, as will the Canadian dollar, but asset prices at some point are going to remain stagnant, what this means is that the money supply will be capped and what comes next is a deflation death spiral because Canadians will have fewer dollars to spend because prices for EVERYTHING will be higher. Fiat money can’t hide a trade deficit.
A more Expensive Government Equates To Forcing The Private Sector To Raise Prices
Because of regulations like the carbon tax and other regulatory COSTS levied by Trudeau, it’s too expensive for the Private Sector to fix this mess without raising their prices, well guess who gets hurt when prices start rising? The people on fixed incomes!
Furthermore, Canadians are being incentivized not to work, so the price obligations for government to provide services are also going to rise, I believe the Canadian government has joined the fight to raise the Federal Minimum wages to $15 all well and good, but that means the cost of government obligations will rise also and if all of this will be paid for by the government borrowing money.
The Bank of Canada if it wants to pay for all of this madness, is going to have to punish people for hoarding Canadian dollars because it will have to push asset prices up in order to stimulate growth. When prices get higher people spend less money, not because they want to spend less money but because they have to. The problem with this current economy is that it hallowed out the middle class.
All of this points to negative interest rates unless of course, Tiff Macklem has the cajones to start raising interest rates. Justin Trudeau needs a reality check, but things typically don’t happen in the manner they should, I personally think Canada is going to see inflation running red hot while the Canadian dollar strengthens. This has an economic crash written all over it, but… this crash can be delayed.
Joe Biden, leads from behind, I read some people claiming that Joe Biden’s better years are behind him, I researched Joe Biden he has no better years, he’s always been a parrot, he’s always been a moron, he’s always been stealing material from other people. Joe Biden has a very low IQ and what this means is that he’ll unintentionally destroy the U.S economy, via his own ignorance.
Canada is not much better, I don’t call former Liberal PM Paul Martin a stupid man, I actually like Paul Martin, as corrupt as he was, he understood basic economics, Justin Trudeau on the other hand, is clueless about the economy and he’s been rewarded by the Bank of Canada for being financially clueless. Chrystia Freeland is not qualified to be a finance minister but she is and despite what Canadians think, there are serious economic consequences headed our way for making these people leaders over us.
Eventually, the Bank of Canada is going to see that they’re facilitating economic stupidity and the Bank of Canada can decide if it wants to take the blame or if it will pass the blame over to those who rightfully deserve the blame. My money is on that the Bank of Canada does the wrong thing and introduces NEGATIVE INTEREST RATES!
Interesting times ahead!