Canadian Money Forum banner
741 - 760 of 840 Posts

·
Registered
Joined
·
11,213 Posts
Maybe we are, but nobody can predict the future and anyone who says they can with 100% precision is a liar.

Everyone in economics agrees we are entering uncharted territory. They don't know what lies beneath the waves.

Beware the Kraken !
Of course it's "uncharted" because we haven't been here.
However it's pretty obvious that we're headed for trouble.

We're facing high inflation for several reasons.
1. Limited supply of in demand goods
  • Housing
  • Oil & Transportation
  • General supply chain disruption
2. Low interest rates.

Hiking interest rates vs the first half of the inflation cause is BOUND to fail.

The idea that we'll just make people so poor they stop buying stuff, particularly essentials like food, is the DUMBEST way to fight inflation.

Like sure if you starve people maybe it will lower inflation, but that's a pretty heartless way to solve the problem.
 

·
Registered
Joined
·
2,696 Posts
It is uncharted because we never had such morons running the country.

The economic situation calls for decreasing government spending, increasing the value of money, decreasing the red tape on businesses and productivity, suspending the taxes on energy.

However, we have idiots in charge so none of that will be done - and this is why we are in uncharted territory
 

·
Registered
Joined
·
2,726 Posts
The idea that we'll just make people so poor they stop buying stuff, particularly essentials like food, is the DUMBEST way to fight inflation.

Like sure if you starve people maybe it will lower inflation, but that's a pretty heartless way to solve the problem.
And your solution is...?

You know the issue with most people when they criticize a solution? Some people want actions that will have an impact NOW, others want solutions that will have an impact in the future.

Turns out we need both.

It's not as if we can significantly increase supply tomorrow. And people have to change their consumerism habits and debt accumulation.
 

·
Registered
Joined
·
24,069 Posts
The idea that we'll just make people so poor they stop buying stuff, particularly essentials like food, is the DUMBEST way to fight inflation.
You're missing the fact that central banks previously inflated people's wealth and credit availability, artificially making people feel wealthier than they really were. People started using loans to pay for everything. Stock and real estate prices were pumped sky high.

Allowing these things to normalize seems pretty fair to me.

Yes, people will complain. But they previously benefited tremendously from free money (near 0% loans) and also had their wealth / home prices inflated, artificially. Mortgages near 0%. Companies borrowing at 0% too. All of these are a form of government hand-out.

We've had negative real interest rates for borrowing, for about 14 years now! That's literally free money... a government hand-out.

Do you want government hand-outs to continue indefinitely?

The problem is actually that people got used to that state of affairs, and have come to see 0% loans and home prices going up 10% to 15% a year as normal. As you have often said @MrMatt people need to take individual responsibility and cannot depend on the government for everything.
 

·
Registered
Joined
·
1,643 Posts
It instead pushed it into stagflation - yay
Recession seems unlikely anytime soon.
We have a structural shortage': Record high job vacancies unlikely to reverse any time soon, economists say
Latest numbers show a job vacancy rate of 5.6 per cent, continuing an upward trend since the first quarter of 2016
Canada is reporting its highest quarterly job vacancies on record, with 957,500 open positions in the first quarter of 2022 — up 2.7 per cent from the previous peak last quarter.
The unemployment rate dropped to a record low of 5.1 per cent in May. As a result, the ratio of unemployment to job vacancies fell to 1.3 in the first quarter of 2022, it said.


Rate increase is much needed, hopefully the central bank will start soon.
 

·
Registered
Joined
·
2,696 Posts
The growth estimate for next quarter for Canada has been revised from 0.8 to 0.4%.
Clearly economists disagree with you that recession is unlikely.
Unfortunately this time it isn't just recession - it is recession with inflation
 

·
Registered
Joined
·
2,222 Posts
Discussion Starter · #747 · (Edited)
A lot of people talk about the high job vacancy rate as a primary reason as to why we can avert a recession. Unfortunately, when economists rely on these stats they rarely indicate what factors would bring this number down from either a positive or negative perspective.

It is a common assumption that areas of high vacancy will be filled with rising wages. Not sure if that is always the case. What if wages don't go up enough to attract workers and we see further slowdowns. People view work and careers much differently than they did pre-pandemic. Yet some employers are reluctant to shift from the old model while others have embraced the change. Most see work from home as the major shift and it could be for some jobs. Not every sector has work from home. One area of change that is often overlooked is absenteeism due to illness. Many are encouraged or do not go into work when ill while pre-pandemic we all suffered through cold and flu season at the job.

The current inflationary environment is not just new to many consumers it is also new to a lot of business operators. Increasing wages may attract workers but will likely also require an increase in the cost for their products or services. Employers have been raising wages but I doubt they are keeping pace with inflation especially in lower skill jobs where there seem to be the highest vacancy. What if job vacancies remain high because the majority of the vacancies are in lower wages areas? One really has to dig into the data to see what is happening.

I think we could see peak inflation come July and hopefully by fall the "transitory" supply chain problems go away. So far it doesn't look promising with isolationist trade sentiment on the rise.
 

·
Registered
Joined
·
2,696 Posts
Biden now calling for gas tax suspension. If it goes through, Canada will be the ONLY country in G7 without any energy tax relief for their citizens.
At this point all other countries than Canada and US suspended taxes on energy
 

·
Registered
Joined
·
19,193 Posts
Reducing taxes on fuel will increase demand on strained supplies. Lowering consumption taxes increases demand which leads to higher inflation.

We are entering a financial twilight zone where nobody knows what to do without causing problems somewhere else.

All people can do is secure their income, stock up, reduce discretionary spending, and hold on tight.

That is what Sags is doing.
 

·
Registered
Joined
·
19,193 Posts
In that scenario, you wouldn't want to be one of the wealthy elite.......mobs with pitchforks and all that.

Although scholarly debate continues about the exact causes of the Revolution, the following reasons are commonly adduced: (1) the bourgeoisie resented its exclusion from political power and positions of honour; (2) the peasants were acutely aware of their situation and were less and less willing to support the anachronistic and burdensome feudal system; (3) the philosophes had been read more widely in France than anywhere else; (4) French participation in the American Revolution had driven the government to the brink of bankruptcy; (5) France was the most populous country in Europe, and crop failures in much of the country in 1788, coming on top of a long period of economic difficulties, compounded existing restlessness; and (6) the French monarchy, no longer seen as divinely ordained, was unable to adapt to the political and societal pressures that were being exerted on it.

 

·
Registered
Joined
·
1,643 Posts
Biden now calling for gas tax suspension. If it goes through, Canada will be the ONLY country in G7 without any energy tax relief for their citizens.
At this point all other countries than Canada and US suspended taxes on energy
I didn’t notice a reduction of huge SUVs and pickups on the roads around. I must assume that gas prices don’t bother Canadians at all. Have you noticed any changes to the traffic?
I personally don’t care if gas is 5 bucks per litre. Can’t afford driving? Walk or ride a bicycle it’s free.
 

·
Registered
Joined
·
2,696 Posts
I didn’t notice a reduction of huge SUVs and pickups on the roads around. I must assume that gas prices don’t bother Canadians at all. Have you noticed any changes to the traffic?
I personally don’t care if gas is 5 bucks per litre. Can’t afford driving? Walk or ride a bicycle it’s free.
That's silly. You haven't seen reduction of SUVs and huge pickups on the roads around because energy, and gas are necessities. Same as food.
People who live 30-60km from work can't 'hop on a bike' or walk. They also can't buy a new car on a whim. They will also not be able to buy a property right next to work.
Same as they will not buy a bigger car, move further away from work, if you stop taxes on energy for 3 months

I have lived in city of 800,000 in Canada and you are more likely to get stabbed on public transit than get to your destination in a relatively good time.

Gas and transportation is a necessity of life with the cities and the country designed the way they are.
Also, transportation costs have input in other prices. Getting rid of taxes on energy is a targeted aid for lower-middle class that was priced out of city centers, need to drive to work, needs to cool/heat their living quarters.
 

·
Registered
Joined
·
11,213 Posts
And your solution is...?
Short term or long term.

Immediate, be careful watching impacts. The rate hike is going to hurt a LOT of people.

Longer term, a broad reform of government based on liberal (today "right wing") principals. (basically not socialism, and not social conservative).
In short, get government OUT of all the economic manipulation that makes the situation worse.
 

·
Registered
Joined
·
11,213 Posts
I didn’t notice a reduction of huge SUVs and pickups on the roads around. I must assume that gas prices don’t bother Canadians at all. Have you noticed any changes to the traffic?
I personally don’t care if gas is 5 bucks per litre. Can’t afford driving? Walk or ride a bicycle it’s free.
My gas consumption is insignificant, but I don't drive the truck that supplies my local grocery store.
 

·
Registered
Joined
·
67 Posts
Yeah people don't seem to care about gas prices. I still see people idling their cars while they wait for whatever they are waiting for. At my kids dojo some parents idle for 45 min. It drives me nuts. When I wait, I go out for a walk.

This will be the first time I'll be aware of inflation so it'll be an interesting experience. We are lucky to have good jobs and good savings. For the first time I'm actually kind of excited about our GICs. We just renewed a rung at 4.45% from 1%. I might buy more to make sure I keep my cash cushion instead of buying stocks.

I'm hoping to use this down draft to buy good value stocks, increase our dividends and hopefully retire. Or at least downgrade my job.
 

·
Registered
Joined
·
1,643 Posts
My gas consumption is insignificant, but I don't drive the truck that supplies my local grocery store.
Neither do I.
Grocery is still insignificant percentage of income in Canada. And last time I walked by fast food people still lining up to buy a burger or coffee. I personally don’t see any signs of inflation in people’s spending habits. Still lots of expensive gas guzzlers on the roads (no one wants to down grade and save on gas), fast foods and restaurants are still packed (no one wants to save on food and cook at home), people still shopping for houses etc.
 

·
Registered
Joined
·
666 Posts
I didn’t notice a reduction of huge SUVs and pickups on the roads around. I must assume that gas prices don’t bother Canadians at all. Have you noticed any changes to the traffic?
A month ago, I went on a 3 hour drive. It might be my imagination or just the time of day but I had the impression that there were far fewer people speeding past 120 km/h. Almost none. Usually, there are many who zoom by, often in large vehicles.
 
741 - 760 of 840 Posts
Top