The UK GDP fell by 22.1%, The Canadian GDP fell by 12%, the difference being that the U.K relied on existing safety net programs whereas Canada created The Canada Emergency Response Benefit (CERB) – September 15, 2020,
So for the record and this is something Canadians should pay very close attention too. In the U.K the British pound even if devalued tremendously has a long way to go before it would even be on parity with the U.S dollar. Canada in contrast with far more natural resources as a country than the U.K already has a lower-valued currency than America.
Playing the lower valued currency game that’s common in east Asian countries, requires the people of your country be highly productive and efficient. Devaluing your currency allows the goods you make to actually yield more money than they otherwise would, which then allows your government to spend beyond its means.
Unless you have the dubious honor of having Special Drawing Rights (SDR) like the British Pound, Japanese Yen or the Euro have, you’d be wise to pay close attention to your country’s spending. There is a myth some Canadians imagine to be a fact, one such myth is that Canada can do anything America does, this is simply not true, we can’t print money the way America prints, because there is a much bigger global demand for U.S Federal Reserve notes than there are for Canadian dollars.
I bring this up simply because The UK GDP fell by 22.1% primarily because the U.K government didn’t do what America did. In the U.K their government relied on existing safety net programs to carry them through the Coronavirus pandemic.
In Canada, we made an error in my opinion, in the way we responded to the pandemic, we did what America did which was we paid Canadians COLLECTIVELY more money than they’d make had they been working at their jobs. Even with this payoff, Canadas GDP is still at 12%, a reminder that rent and mortgage deferrals are still a thing in Canada also.
So not only did Canadians get paid not to work, but a lot of Canadians who otherwise would have defaulted on their mortgage were also allowed to skip a few payments, this also means an obvious housing market crash that should have happened didn’t.
Now although a lot of people think that money printing is inflationary, the truth is that most people in Canada are already in some form of debt, what this means is that printing money is actually deflationary and/or the money printed is being put to work in unproductive means, like paying down debt.
This actually equates to currency debasement. Even when America gave away all that money, a lot of it went to pay down debt, or buy and prop up asset prices, how anyone could mistake that as inflationary to mainstreet is beyond comprehension, I assume some people like to ignore debt whenever they deem it convenient. Any price appreciation you see in Mainstreet is actually debasement of your dollar, which happens because your government is in debt.
But I bring all of this up to Canadians to point out the obvious if the U.K without any new money printing programs has 20%+ negative GDP imagine what Canada will look like if the Canadian government stops handing out cash? In Ontario, as an example, the public school teachers don’t want to work in a classroom but they still want to get paid like they’re working in a classroom.
Nothing destroys a country more than a lack of productivity, cash is debased when it’s clear to the investor that a country won’t be able to pay its bills. I’m not trying to promote doom and gloom, all I’m writing to the reader is that they should see the situation in Canada for what it is!
Interesting times ahead!