Will The Bank of Canada Rise In Interest Rates Crash The Housing Market? The Housing Market Already Crashed and The Liberals Bailed it out with Debt Deferrals and CERB – April 17, 2022,
So there are these oddball theories, which are mostly coming from people deeply in debt, that talk about the debt markets freezing up, if interest rates are normalized, well duh, but that’s going to happen even if the Bank of Canada(Boc) keeps interest rates at zero. What the Bank of Canada is doing is rising interest rates so it has room to bring them back down at a later date.
I’ve been saying for more than a year now, that I expect the bank of Canada to go into negative interest rates somewhere in the future. The type of consumer price inflation Canadians are experiencing now, has nothing to do with “money printing”, most of the money printing is BORROWED into existence, The deficit in Canada is now in the trillions, Canada is already bankrupt, what’s keeping us afloat is the CONFIDENCE in the Canadian dollar.
As long as the confidence in the Canadian dollar holds the course, the powers that be will try to find a way to change the monetary system. In the meantime, what, they’re trying to figure out is how to stop consumer price inflation, which eats away at Canadian’s quality of life. But consumer price inflation is the result of government regulations on the economy. The Bank of Canada is responsible for financing bad Big Government ideas, but private banks, who are mostly responsible for the distribution of money, haven’t been lending for a long time.
It’s not to say that Canada’s private banks don’t have their own challenges, but if private bank lending tightens, that is mostly a Canadian government problem. The Liberal Party of Canada recently announced it would tax Canada’s big banks, for a problem the Liberal Government of Canada caused.
Tax hit just one of the ways Ottawa is making large financial institutions pay for the COVID recovery
Prime Minister Justin Trudeau made good on his promise to make big banks and insurers pay extra to help cover the cost of fighting the pandemic in the form of a 15-per-cent tax on income above $1 billion in 2021.
A reminder that Canada’s big banks, can’t create laws that force productive people to be unproductive. A lot of Canadians defaulted on their mortgages and other loans when Justin Trudeau decided to lock down the economy and create a vaccine passport system that limited the movements of Canadians and people wishing to enter Canada. The banks could have easily dealt with these defaults on their own, but the Federal Government intervened. Even if you liked the intervention, it was an instance in which the tyrannical Canadian government was clearly overreaching.
Well, these recent events by the Liberal Party of Canada have consumer INFLATION written all over it and if the big banks aren’t allowed to raise prices, likely they will change their lending behavior. Banks have shareholders to answer to and if shareholders aren’t making any money from Canada’s big banks they’ll dump the stock, which destroys the values of these private banks.
Canada is very fortunate to have a lot of financial entities wanting to lend us money, this is not common around the world, and currently, Justin Trudeau’s new war after going to war with fossil fuels is going to war with the private banks. So if private banks stop lending or change their lending criteria this could lead to deflation in the real economy.
Consumer price inflation is the direct result of regulations on the economy, consumer price inflation, and money printing have a differing relationship. Fiat Money is based on confidence and confidence in the Canadian dollar in the foreign exchange markets is still relatively high in comparison to other countries and the cost of living is still low for Canadian dollar holders if they move to countries like Thailand and Colombia. I bring this up to further clarify my point that consumer price inflation is the direct result of government policy.
The problem is that some people like to imagine fiat money as real money when it’s not, fiat money is currency, and currency is based on confidence, governments can get away with all sorts of BAD REGULATIONS if there is confidence in the currency. In Colombia as an example, their government actually ENFORCES fewer regulations than Canada, but faith in their currency is non-existent, nobody wants to hoard Colombian Pesos, so for people hoarding Canadian dollars in Colombia, they have stronger purchasing power, this is also true if you hoard Gold and Silver in Colombia.
Once you understand “confidence” in a currency and you’re able to detach currency from the economy, it will be easier for you to true problems with the Canadian economy. So again a reminder that the Housing markets, the debt markets, they already crashed, government WELFARE saved us. Because government welfare saved us, it’s only natural that the Liberal Government of Canada would assume that the best course of action moving forward is more regulations, higher taxes higher deficits.
So when I see interest rates rising, all I see is the Bank of Canada raising rates as high as possible so it can lower them in the near future. From where I stand, it looks like negative interest rates are coming to Canada. I can imagine a Bank of Canada speech that goes something like this “We tried higher interest rates they didn’t work, the market crashed and we need to employ these new negative interest rate policies for the foreseeable future to grow the economy”
So what happens to consumer price inflation when this happens you ask? It continues of course LMAO! This craziness ends when a politician is brave enough to employ austerity measures.
Interesting times ahead!