Inflating your way out of debt Canada’s Trade deficit shrinks to $4.2B in January 2019 – March 27, 2019
Inflation is the silent tax, it’s very unsettling to me reading some of the stories because I’m not sure if the people writing these stories either don’t know how to interpret the data or if they’re intentionally trying to mislead the Canadian people. So the Canadian Press reported the following:
Statistics Canada says the country’s merchandise trade deficit narrowed to $4.2 billion in January as higher oil prices helped exports rise faster than imports.
It’s important to understand what merchandise trade deficit is, imports are greater than exports is what a trade deficit is, so higher oil prices helped exports rise faster than imports. Did you get that? Higher oil PRICES helped exports rise faster than imports. Now ask yourself what currency is Oil priced in? I think Canadians forget how important Alberta is to the wealth of our nation, sure an argument can be made that its dirty oil, but make no mistake about it, Canada is not only a one trick pony, it appears that we’re already in recession.
I’ve written in length about Canada artificially devaluing its currency and the impact the Bank of Canada is having on the distortion of prices in Canada. We’re obviously still in a deficit, but it appears more clear now that if the Canadian dollar rises in value or gets too low we’re headed for the worst type of recession imaginable. We’re buying more than we’re selling, we’ve basically priced ourselves out and in the event, America has an economic downturn, now more than ever Canada is in for some serious problems.
Our dependence on imports is something that really bothers me, it’s going to put a lot of pressure on the Bank of Canada in the very near future. There’s an assumption that America is going to be able to keep interest rates low for an extended period of time, I disagree, the market signals are telling a different story, I think people forget that digital money and physical money are two entirely different instruments. All this trillion dollar debt that people think exists, actually don’t, it exists only because the markets believe in America as well as the worlds ability to pay down debt.
The difference between America and Canada is that America’s housing market deflated already and it refuses to come back, a deflated housing market typically reflects the rental markets, this means that most of America’s debts are cars and unsecured loans, furthermore the poor are out of harms way this time, because many of them don’t have access to digital money, whereas in Canada things are different.
What’s not out of harms way in America are pensions and other unfunded liabilities, this is where deflation comes into play, deflation meaning lower prices, fire sales, a slashing of unnecessary spending, which obviously translates to high-interest rates or a failure of the Fed, less digital money available to be borrowed or consumed, actual hard money demanding it’s dominance, possible bank holidays, a renegotiation of debts, this is what is becoming clearer to the markets and this puts Canada’s high taxation, deficit spending, big government on the wrong side of history.
Deficits don’t matter when there’s real money invested in the markets, real money following actual innovation, sure innovations are happening in all parts of the world, but umm, are they happening in Canada? Why should the market hoard Canadian dollars? if the Loonie loses value and prices for imports go up, what can our 1 trick pony economy do to curve real inflation? Crown corporations and government in almost every area of the Canadian economy make things very sticky when recession comes around. Excessive government regulations don’t allow the free market to fix problems, this is why deflation is going to it Canada like a ton of bricks.
Real inflation in case people don’t know is caused by Canada’s inability to manufacture certain goods which means that we’re reliant on another country to make those goods for us. Sure those countries would gladly make those goods for us as long as our currency is something respectable as long as the assumption is that we can pay our bills. That said, most of Canada’s imported consumable goods are priced in US dollars and the reason we pay so much compared to Americans is that the profit margins similar to the price of Oil must account for the currency conversions, which for Oil, from a Canadian perspective in Canadian dollars is usually profitable, in other industries, however, not so much, especially if you’re not a sophisticated investor smart enough to invest into cash flowing assets.
This is of course, why supply management appears like it’s working in Canada, we artificially lower the Loonie which guarantees Alberta’s oil is profitable, which also allows government cartels to form to create price controls in certain industries. Now, if Alberta’s economy wasn’t so badly managed and the Canadian dollar wasn’t artificially lowered, most of these government cartels wouldn’t exist, well because these cartels do exist, what’s happened is a lot of manufacturers in Canada aren’t profitable and they’ve left, this even now includes GM.
LACK OF INNOVATION, picking comfort/security over freedom and Liberty has a payback period where you must pay for your secure comfortable prison with labor(Physical Money), meaning you can’t print or borrow your way into prosperity. Just because you paid an inflated price based on digital money valuations, doesn’t mean that item(s) you purchased will demand the same price in real physical cash, it’s a battle of attrition, the Free market is a beautiful thing once you understand it.
The markets have mostly been doing buybacks for the last 10 years, the cost to get into the markets is already too high, it’s so odd to me that Canada can’t see the obvious. I genuinely can’t believe people can’t see what’s coming. Anyway, consider reading the article below, don’t say I didn’t warn you.
Trade deficit shrinks to $4.2B in January – The Canadian Press
Interesting times ahead.
