Lots of Canadian currency, lots of homes for sale: Canadian deflation, inflated housing prices – June 16, 2020,
So, there’s a problem when you’re a country like Canada, and you print lots of money and massively grow the size of your government. Eventually, there comes a time when the economy naturally deflates, it’s inevitable, now if currencies were backed by something like Gold, the government would have to shrink in size, but since we’re on a fiat monetary system, the government doesn’t have to shrink, instead government has to find a way to add government inflation naturally.
the frog won’t jump out of the pot at medium temperature, the frog jumps out if you turn the heat up to a maximum quickly, sure you could put a heavy lid on the pot while you quickly turn up the heat on the frog, but that’s totalitarianism and in a world based on freedom, you don’t want your financiers to pull the money out of your economy.
In Canada, we’re losing the stable investment we used to get in the oil and gas sectors, and unfortunately, this money is going into other areas of the Canadian economy. The tech sector in Canada has to compete on a global scale and based on what I’ve seen so far, we’re lagging and because the Canadian economy is so heavily regulated, I’m not entirely sure what the Canadian tech sector looks like in the future on a competitive scale.
Now, jobs equate to housing, you can’t finance or even maintain the mortgage on an inflated house if you’re not working and if more of your fellow countrymen and women aren’t as productive as they once were and more and more people are dependent on a government handout to simply pay their mortgage bill, does that not seem like a major problem in the not so distant future?
Now, lucky for the Canadian government, the Chinese Communist Party is attempting to take over Hong Kong and Taiwan which could end up being a stimulus package for Canadian real estate, but the domestic population in Canada is going to soon be hit with real inflation.
Canada’s Keynesian economy, can not deflate, and I just don’t see austerity measures happening in Canada, what I see in Canada’s future is a weird zombie-like economy, similar to Japan, but less productive and fewer savers. In Jpan a lot of people save and invest, it’s the Government of Japan that’s broke, in Canada, the government and a large segment of the population is broke, Canadians don’t have like they used too and I think Canadians forget how many new Canadians are in asset positions.
A lot of new Canadians in asset positions don’t have any creativity and they’re waiting for the government to save them, which I think is going to happen. CERB is being extended and let’s not forget all the other types of welfare that already exist. Based on my research and do not believe this research because it’s my investment research but according to my sources about 61% of Canadians are dependent on the Government for their survival.
During the last great depression, people forget that government workers were counted as unemployed, because back then everyone knew that Governments consume, governments don’t produce, well in this modern economy, Government employee are now counted as employed and you add that up with people on welfare and the people who stopped working and you’ll see how bankrupt Canada is.
Now, fat money has held on, but cash flow is cash flow and it’s going to become clear soon that Canada and many other countries are in very bad cash flow shape. People in bad cashflow shape have mortgages, I was shocked to learn that within one month of the coronavirus lockdown that people with mortgages needed a bailout?
Do you know how hard it is to qualify for a mortgage in Canada? It’s very hard and to think that within one month people needed mortgage deferrals, that told me everything I needed to know about these stupid government regulations and the uselessness of the CMHC!
Now inevitably people are selling their homes in Canada, I think why those numbers aren’t higher is because rent isn’t cheap in Canada and I’m sure mortgage holders who are underwater are probably telling themselves that they wait it out and hoped for some sort of government bailout, because for many their mortgage costs might be less than what they’d have to pay in rent.
Furthermore, let’s be honest, a house is a money pit, and a lot of people don’t have the money to stage their house which probably has a plethora of maintenance-related problems, that they will attempt to hide for the buyer. Now, foreign buyers trying to flee the Chinese Communist Party might be willing to buy a crappy house, so there’s hope for people trying to sell their house for more than they owe on their mortgage.
The downside to all of this is in the best-case scenario the cost of living increases on the poor and the economic distortions in the Mainstreet economy!
Interesting times ahead!