Negative Interest Rates Are Coming To Canada: The Loonie is on the rise and so is the Cost of Living in Canada, Will the Bank of Canada make this error! – March 17, 2021,
In years past, it was a fair argument to say that Canadian Prime Ministers and Bank governors, which by the way included Liberal Prime Ministers and Liberal picked Bank Governors were smarter than U.S Presidents and U.S based Fed Chair people, at least from an economics perspective. But things have changed since the implementation of former Bank of Canada governor Stephen Poloz and current Prime Minister Justin Trudeau, whoever Canadian knows is weak on the economy.
The honeymoon for Justin Trudeau lasted primarily because of the economic success of Donald Trump, who at the very least had the wherewithal to cut regulations while increasing spending. Now, by no means was Former President Donald Trump a traditional Republican, in fact, if you remove his loud mouth, I’d argue that Donald Trump was one of the best Democrat Presidents of all time, tariffs, staying out of wars and foreign entanglements, American workers first, was something you’d usually attach to a Democrat or a Liberal politician, the only mistake Donald Trump made was his big mouth!
Current President of the United States Joe Biden publican is not as silly as Donald Trump to make a statement every other hour, instead, Joe Biden has for the most part been hiding only to emerge whenever he’s going to spend money or regulate more segments of the U.S economy.
Joe Biden is reversing almost everything Donald Trump did and why this should bother Canadians is because there was no recovery under Barack Obama, when Obama left the White House interest rates were still near zero and everyone knows the reason interest rates remained at zero had to with Obama’s regulatory environment, which by the way was nowhere near as bad as Joe Biden’s regulatory environment on America’s private sector, which appears to be slowing down the U.S economy.
Why this should be concerning to Justin Trudeau and the current Bank of Canada Governor Tiff Macklem is that there is absolutely no benefit for Canadians to have a higher loonie, now there would be a benefit to Canadians if austerity measures were on the table, but austerity measures are not likely even if Conservative Politician Erin O’Toole is Canada’s next Prime Minister.
If Erin O’Toole beats Justin Trudeau which I suspect he will, the likely scenario s that the 4 Leftist Parties in Canada are likely to form a coalition against him. The Bloc, The Liberals, The NDP, and possibly the Green Party are likely unless Erin O’Toole is able to win a majority, will more than likely keep the spending taps flowing and the only way for BoC Governor Tiff Macklem to accommodate these politicians will be to lower interest rates.
Because make no mistake about it, we’re only in March the housing market in Canada is booming, why? Because it’s safe to bet, that the Canadian government is going to inflate the debt away, which equates to a higher cost of living, which… what most Canadians forget is a pay raise for public sector workers.
Most public sector workers and union workers, in general, have wages that keep up with inflation. So what, who cares, that’s the right thing to do, many will argue? Well, yes, but if enough taxes aren’t being collected from the shrinking private sector to pay for public sector workers and Canada’s trade deficit continues to grow with the higher-valued loonie, and the American economy in which Canadian manufacturing is reliant slows, I hope you can see the economic disaster looming.
That’s obviously a lot of “ifs” in the prior paragraph, but the pay raises to Canadians that came via The Canada Emergency Response Benefit (CERB) and Canadian consumers ability to avoid the cost of living increases via debt deferrals, free money from the government and stimulus via the Canadian central bank has a price tag attached, that can only be serviced via declining PRODUCTIVITY!
Now the right thing to do is to raise interest rates, to get all the bad money and bloated government out of Canada, but it’s unlikely Tiff Macklem will do that, there is only one choice I see Tiff Macklem having, leaving interest rates where they are now, and then when the Canadian dollar continues to rise, cutting interest rates, first lower, then ower some more and then going Negative.
Gridlock in Washington is should be on Justin Trudeau’s wishlist because Joe Biden is as dumb as dumb gets when it comes to the U.S economy. and Justin Trudeau no longer has Trump to blame for the Canadian economy, I’d watch those gas and energy prices if I were you, because, if working and productive Canadians have to pay for Justin Trudeau’s carbon tax, while CERB and other government welfare recipients don’t have to pay anything via their labour, Canadians are going to be the first to notice how worthless currencies all over the world are becoming, under the new normal of Zero and negative interest rates.
Sorry to all of you believers in centralized digital currency, it’s already failing in China, as the digital centralized currency, similar to decentralized cryptocurrencies, is having a difficult time attaching itself to anything of value.
Bitcoins price gains, as many people are noticing isn’t attaching themselves to any commodity, or anything of substantive value, instead, Bitcoin is attacking itself only to Government fiat money, well the experiment in China is having the same issue and the Chinese who are used to hoarding cash are dumping the Digital yuan for something of value.
This isn’t having the stimulating effect the central bankers in China had hoped for, and I write about this because it’s happening to fiat dollars also. The Canadian dollar is still attached to oil prices and if you’re a forex trader, you don’t care, what Justin Trudeau does, because as long as Canadian dollars can be spent outside of Canada, who cares, what happens inside of Canada, that’s a Canadian government problem.
CENTRALIZED digital dollars, on the other hand, are TRAPPED in their countries of origins and because of the political nature of centralized digital dollars, the industrious Chinese, who know better are getting out whenever possible.
I bring this up because the day of reckoning is on the horizon, my clock has 2022 as the year things really start breaking down, but who knows, it could come sooner or later, I point to 2022, because of various PRIVATE debt deferrals as well as debt related to the Government of Canada.
In Toronto, the homeless problem was getting so bad that the mayor has now put a lot of homeless people in HOTELS! I remind the reader that homelessness in Toronto was rising while the Federal Government was handing out CERB cheques! In Toronto, even rooming houses are reaching $1200, yes a shared rooming house maybe with 4 people might cost you $1200.
The reason for this homeless problem is because the cost of living in Canada, it’s too high, it’s not reflecting the private sector at all and it’s only begun, the real economy in Canada has been DESTROYED by Justin Trudeau, the only people who don’t know it are those of us lucky enough not to be forced outside!
And again the solution is simple, but it’s also painful, which would be to normalize interest rates, but let’s be honest, that’s not going to happen, what’s most likely going to happen is interest rates will hold steady, then they’ll be cut then we’re going to negative interest rates! my timeline is the year 2022!
Interesting times ahead