Justin Trudeau’s Liberals would still run big deficits add new taxes and assume debt-to-GDP ratio in Canada wouldn’t get worse – September 29, 2019,
One of the reasons Canada is having investment problems stems from the long term economic outlook for our country. In the article below, the writer states the following:
the Liberal platform released Sunday projects another four years of deficits — $27.4 billion next year, falling to $21 billion by the fourth year of the mandate.
However, it promises that Canada’s debt-to-GDP ratio, already the best among G7 countries, will continue to decrease.
The new taxes, combined with revenue from the Trans Mountain pipeline expansion project, would fatten federal coffers by $5.2 billion in the first year, rising to $7.2 billion in the fourth year.
Re-elected Liberals would still run big deficits, despite new taxes | NationalPost.com
To understand the debt-to-GDP ratio is understanding that the government gets its money via taxation. In a fractional reserve environment, the Canadian government via entities like the Bank of Canada can also ease lending to stimulate growth. Now the downside to deficit spending is wage growth, which is a problem all over the world, when it’s easier to borrow money, finding people to work harder for money becomes more challenging.
If you haven’t been paying attention there’s a huge labor shortage in Canada. If you’re wondering why that is it’s because of price distortions and over regulations. If I have a skill and I’m going to enter into a heavily regulated or high pressured environment, I don’t only want to be paid more money I also want the money I make to buy more. SO let’s say I’m an engineer after I make my money, pay all my taxes, I should realistically in my mind be able to pay off my house in 5-10 years.
But because money is so cheap, paying off a mortgage for a millenial is not a realistic goal in Canada anymore. Wages can’t keep up with inflation because not only is Canada engaging in deficit spending, we’re stimulating growth using cheap money. People can effectively borrow money for nothing and make a better return on their investment with less risk than a person who works and pays income taxes. If you know anything about the tax code you know it’s supposed to revolve around fairness, well when the government can print cheap money, people working for a wage get screwed over the most, because remember these are the people being targeted by loan sharks.
Making matters worse, Public servants and our public services aren’t free and even if the Canadian governments end goal is to have a Greener economy, they have to create an environment that attracts investment. Trudeau has been unsuccessful at attracting investment, in fact, Trudeau’s cabinet set a horrible precedent by purchasing the
Trans Mountain Pipeline.
Even after purchasing The Trans Mountain Pipeline Trudeau’s Liberals still haven’t done anything, instead, using The Trans Mountain Pipeline as a means of political leverage over their opponents. This move halted investment, because Nationalisation of something as small as an oil pipeline is signal to the markets, that a Fidel Castro type figure is micro-managing the Canadian economy. Now, unfortunately for Canada, our mainstream media has been doing everything in its power to make Trudeau seem like he’s good for the Canadian economy, however when you look at the numbers for what they are you get a better picture of the grim shape the Canadian economy is in.
Foreign investment in Canada—nothing to celebrate | fraserinstitute.org
Is Canada a third world country? No, but competitively Canada under the leadership of Justin Trudeau is in a very similar economic situation to what happened under Pierre Trudeau. In easier to understand language, Canada is no longer competitive however, we’re still able to ride off of the coattails of better times under the Chretien, Martin, and Harper eras. As pointed out in the Fraser Institute article the best thing about the Foreign investment reports is that they were better in 2018 than they were for Justin Trudeau’s prior years, in office, but again the gains come at a loss because Trudeau is paying for public services using more and more borrowed DEFICIT money which also has to be serviced and eventually paid back. Even if the interest rates remain low now and into infinity, understand that Canada’s money problems are getting progressively worse
When Trudeau engages in deficit spending it’s important to remember that public servants and public services are being paid for NOW with money taxpayers will have to pay back to the BoC in the future. Might not seem like a big deal, but if a recession hits, which is something normal, deficits can expand very rapidly, because without foreign investment, especially in a heavily regulated environment it’s very difficult to simulate real growth. This is why people like me ignore debt-to-GDP ratios because these numbers ignore policies.
When a person qualifies for a mortgage they’re qualified under government created guidelines, well the markets especially foreign markets often pin one country up against others to see which country offers them the best return on investment. This is why Progressive governments are so dependent on deficit spending. As they change the rules, their hope is that their competitors change along with them. Of course, we know this as Globalism, but it’s one of the reasons Communist dictatorships like China have become so economically powerful. The dumbing down of society comes at a cost and eventually, Canada is going to have to pay for it’s standard of living with REAL, money.
Re-elected Liberals would still run big deficits, despite new taxes | NationalPost.com
Interesting times ahead