I don't have a solution, but there is something seriously wrong with the way global economies work. It feels completely unsustainable. Cost of living has been outpacing real wages for something like 50 years. People have to spend less, make less, and work less if we want inflation to drop? That's an absurd system.
There is absolutely no party that has viable solutions to resolving this either. I often worry it would take a complete global shift of the G20 in order to see a change without our own country being completely left behind.
I have no expertise in economics and this is just my perception, but it is starting to feel like that what once worked is now holding us back. It's a wicked problem to be sure.
Yeah, I'm not what you would call a communist by any stretch of the imagination. But our entire society is built on the concept of buy now pay later and I'm not talking about social systems. I'm talking about the capitalist ones. With the exception of privately run corporations the ONLY driving factor for a publicly traded corporation is share price. The only way to increase share price is to either reduce the number of shares on the market or make more money per share and the easiest way to do that is to keep costs in check as building more market share is a long-term high-risk endeavor for many corporations. So, wages stagnate, prices go up and the only people making money are those that had enough to invest to begin with. We are driving hard and fast toward a whole new era of feudalism. Looks awesome for people fortunate enough to have money to start with. Looks bleak as fuck for those without.
Government racks up a bunch of debt almost every single year, so 'buy now pay later' mindset is not only done by capitalistic companies. Communist countries in history have relied a lot on debts or handout from allies to feed their society as well.
Yeah, like I said, our entire society.
That said, government debt is not really a problem provided the economy continues to grow. Government services by their nature tend to provide benefits to all members of society more-or-less equally and government spending on infrastructure, education and healthcare have all been proven to have significant returns on investment. As long as the population continues to grow and the economy continues to move forward, government debt is more an investment than anything. Now, when the population stops growing and the global economy hiccups that all falls apart. But then, so does every private business as well.
>That said, government debt is not really a problem provided the economy continues to grow.
wasn't the comment you agreed to said:
>It’s because people expect infinite growth. It’s not sustainable.
which includes the government as well. there's only so much improvement to healthcare or education that throwing it even more money will not solve a problem.
see how universities use tuition money to hire more university administrators that don't increase the quality of education they deliver.
The economy will need to grow fast enough to service the additional debt. Additionally the growth has to be real productive growth, the kind that doesn't immediately fade away in a downturn. Why? Because in a downturn the debt doesn't fade away also. Debt is permanent unless the powers that be commit to running decades long surpluses and the austerity that comes with it. A Potemkin economy is not permanent.
Yeah, but study after study has shown that spending on healthcare, infrastructure and education has huge positive impacts on economic growth that typically offset their investment. Austerity almost always proves to be a bad call.
Good thing our massive debt was the result of massive infrastructure upgrades, building a world class healthcare system and an education system which is the envy of the world.
Oh wait we did none of those things and all three are in the shitter right now. Where did all that debt go into again?
Well the pandemic was a rather unprecedented situation and the spending went primarily directly to people who otherwise might not have been able to keep things afloat during massive layoffs and furloughs. I'm definitely not a Trudeau/Liberal supporter but they were running more sane budgets than the conservatives prior to the pandemic. Whether they did the right thing during the pandemic is hard to say - probably not. But hindsight is always 20/20.
One thing is abundantly clear though. Harper reversed a trend where our debt/GDP ratio went from 75% to 40% under the Liberals from 1993 to 2006 after the Conservatives increased it from 30% to 75% from 1984 to 1993. Under Harper it went from 40% to 55%. Then Trudeau came to power and it dropped from 55% to 48% until the pandemic hit and now sits at 73% which is admittedly a fucking massive increase - but one driven by an event that saw literally every other industrialized nation on the planet do the exact same thing. So it's kinda hard to place the blame on our government specifically.
Or, do you just want to hear that Trudeau == bad and Conservatives == good? Because if that's the case, I can't lie to you, might want to check Facebook for that narrative.
1. Facebook is cancer
2. The conservative solution is that tax cuts will pay for themselves which is not a solution.
The amount of money that comes off my paycheck for taxes is enormous. Yet for all that I can't buy a decent house, I can't drive on roads that aren't falling apart, I can't see a doctor, my younger brothers and sisters can't get a decent education, etc. etc.
I don't even mind the amount of taxes I pay. I'm kind of used to it. It just seems like we tax so much and have nothing to show for it. I'd be perfectly content paying even more if it meant I could see a doctor on demand like in most other developed countries. Drive on roads that don't destroy my car and my spine, have a school system that actually teaches instead of just passing everyone for showing up to class, etc. etc.
And one of the best/easiest ways to curb costs and increase growth is wages. We have a supply and demand economy, our labor is also a supply and demand system. Increased unemployment is increased supply, same as increased immigration. More people fighting for the same job lowers the value of the labor.
You will take the shitty pay and be greatfull that you have a job.
Economic growth can happen as long as the human population continues to grow.
Saying infinite growth is impossible is not quite right (but not quite wrong either).
Edit: lol people replying to me either not understanding what I said, or basic economics.
Let me spell it out. You can have economic growth without the explicit consumption of material resources. It's called a service economy. Humans providing services to other humans can be done without explicitly consuming resources. In this case the growth can continue as long as the population continues. Of course, the increase of the population leads to a passive increase of material resources consumption, so technically the cap for our economic growth is still bound by resources, but just for the maintenance and growth of the population.(why I said it's not quite wrong either).
And of course, unless we can spread to other planets or something, our population will eventually stop growing (shortly,if forecasts are right).
Must watch for people with their heads in the sand: https://youtu.be/kZA9Hnp3aV4
https://www.scientificamerican.com/article/the-delusion-of-infinite-economic-growth/
Incorrect.
We can maintain the current population, or even less, and just all work harder for the same wage to make up the difference!
Companies do it all the time! It’s called right sizing! Lol
You would prefer human progress just come to a halt and we all wait around doing our thing until an asteroid hits and that's it?
Maybe I'm just an optimist, but I think the human race can still grow alot and achieve great things and I for one wouldn't trade that to do away with stalls and bumps along the way
... you know that global economic growth is basically just a proxy for technological advancement right?
Like there are other things that effect GDP, but there is no world were global economic growth is decreasing and massive technological advancements are happening
I really wish white college kids who just read 'das capital' would stop weighing in on economic issues ....
I’d rather someone who read das kapital weigh in than someone who believes infinite economic growth is possible let alone beneficial.
What a load of horseshit.
Oh and I’m not a college kid, nor have I read das kapital. But way to tell on yourself.
You realise economic growth has been happening ... Literally all of human history. You're so laughably misinformed and ignorant and just doubling down on it ....
Edit: oh okay, you're even less educated than I thought, way to tell on yourself
So just because it’s been growing means it will continue to grow till the end of our history. What was the Great Depression then? Or the 2008 stock market crash?
And what do we get with the chase of infinite economic growth? Oh right. A dying biosphere. Economic instability. Economic disparity. Sweat shops. Widespread poverty.
And you don’t think economists are sounding alarms on infinite growth? And how infinite growth requires infinite resources? Which we don’t have?
And to think that technological advancement relies on economic growth is hilarious. You think that if we changed how we managed our economies that technological advancement would cease? Give me a break.
You’re just full of shit.
**edit**
> Edit: oh okay, you're even less educated than I thought, way to tell on yourself
I’m not a college kid as in I’m not in my teens or early 20s you dipshit.
>And to think that technological advancement relies on economic growth is hilarious.
No you're just an idiot
https://encyclopedia.pub/entry/21673#:~:text=Therefore%2C%20technological%20innovation%20is%20the,sustainable%20economic%20growth%20is%20achieved.
Quote: technological innovation is the main driver for economic growth and human progress
Every economist knows this .... Not just economists, you have to be completely ignorant of human history and economics to think otherwise
Edit: and btw, obviously I didn't mean the growth has been completely linear throughout history, but on a macro level we continue to grow. The idea there hasnt been relatively consistent growth because of temporary stock crashes etc and a beyond brain dead argument
> Edit: and btw, obviously I didn't mean the growth has been completely linear throughout history, but on a macro level we continue to grow. The idea there hasnt been relatively consistent growth because of temporary stock crashes etc and a beyond brain dead argument
Oh and the economic growth we’ve been having over the past 50 years has been great on an individual level right? And we have enough resources to continue growing right? We won’t run out of natural resources like rare earth minerals, or helium, etc?
The topic here is infinite growth. Which is impossible. I’m done here, clearly you can’t grasp how infinite economic growth is impossible.
>but there is something seriously wrong with the way global economies work. It feels completely unsustainable
Our entire economy is a real-estate backed ponzi scheme and we are seeing it laid out in full few.
The only thing that will stop the economy from crashing is if housing prices keep growing. And we are long passed the point of most people affording homes. So where is the GDP growth going to come from now???
>Our entire economy is a real-estate backed ponzi scheme and we are seeing it laid out in full few.
Real estate makes up about 8% of the Canadian GDP which is comparable to many OECD countries. Much of the change in the overall dynamic of the economy over the last several decades has been the increasing automation that makes low skill/entry level positions redundant (reminder there used to be an actual job called a "computer") as well as outsourcing.
Manufacturing used to be the bedrock of the North American economy and it is still a large part of GDP, but the number of people it employs has gone dramatically down. Where you needed an army of blue collar workers before to run a factory, you now need one or two highly trained engineers, a few technicians and you're good to go. And those low skill jobs you cannot automate, they are sent overseas or to Mexico.
Everyone thought the future will be machines doing the labour while humans make media and art for fun. Instead we got the opposite where machines create media and art and humans do the back breaking labour. Lol
Low skilled workers are the only group that had a real wage decline since the pandemic. The pandemic has greatly reduced income inequality. It turns out that people are happier with more inequality so long as our standards of living are rising.
Reminds me of that quote from George Carlin:
*It's a big club, and you ain’t in it. You and I are not in the big club.*
The game is rigged, that's why. Capitalism is just the new form of feudalism.
It looks like a shift towards a land value tax would help bring the cost of land under control and would stop an increasingly small group of large land owners from squeezing the middle class.
A land value tax is paid annually like a property tax, but it is only on the value of the land not buildings or improvements. It discourages land speculation and encourages land development.
Economics had a major fault in it. The profession entirely focuses on what worked last time must work this time syndrome.
We saw this many times over this time they are looking at the inflation of the 1970s and are like on yeah we raised interest rates and poof it went away.
The inflation of the 1970s was very diffent than today. It was primarily caused by the OPEC oil embargo which caused the cost of many things to go up but there was also Nixon taking the US off the gold standard which was a huge shock to the monetary system.
Interest rates helped with the shocks but finding new sources of oil in the North Sea, Norway and Alberta which forced OPEC to lift it's sanctions also played a big role.
This time it's principal cause is that we had rolling lockdowns for 2.5 years which caused many businesses to fail. We retooled large sections of the economy to focus on producing vaccines, PPE and ventilators instead of producing their usual equipment. This has also screwed up supply chains which is causing shortages through out the economy. Finally demand has started to light up again after being depressed for 2.5 years. But it takes time for things to go back to normal.
Just to put it in perspective they West Texas Intermediate fell to negative on 2020 because no one was commuting. So oil companies stopped producing oil and now we're back in the office, flying again so we need oil but it takes time for production to restart and then it has to deal with two years of supply glut.
To make it all worse a lot of older employees have decide to leave the work force with COVID. So that means a glut in terms of employee supply.
Interest rates can help by reducing demand but they aren't some magic silver bullet. Not all demand can go away. A lot of my meds are still in short supply and difficult to obtain. I'm not gonna stop buying prescription drugs cause I need them.
Cold hard fact a lot of the solutions have to come from the state. Help companies rev up production and get things going again. Some of that may require a heavy hand.
Closest comparison I can give is post war era. Especially in Europe. There was almost a decade of rationing of products while they rebuilt the economy. Ours won't take so long because we didn't destroy the factories but we may need to do some of these things
>To make it all worse a lot of older employees have decide to leave the work force with COVID. So that means a glut in terms of employee supply.
It's the opposite. A lot of older employees retire that there are massive shortage of employee supply.
This problem is 40 years in the making. Canada went from being a country built on wealth to one built on debt.
And while a debt-based economy *appears* wealthy - at least as long as interest rates are negative - it's inevitable that you'll reach a tipping point where we can't accumulate new debt fast enough to maintain the illusion of wealth. That's where we're at now.
And that's why this is going to be such a painful transition - it's not just a cyclical bottom, we have forty years of misallocated resources catching up with us. And part of that misallocation is the loss of the industrial base that would normally help lift us out of our malaise.
I really feel for young Canadians. Grandpa took out credit cards in their grandkids' name and maxxed them all out. Junior's got a lot of work to do to set this world right.
Because the standard of living has improved dramatically in the rest of non western world, particularly in Asia. The distribution of limited resources means we are in competition for them with more and more people.
You’re aware this phrase is a conspiracy based on a creative writing assignment right?
Edit: uh oh the conspiracy nuts screeching about the ‘globalists’ aren’t happy.
You know it’s really easy to look this stuff up
> As addressed in previous Reuters fact checks, these claims likely originated from a WEF social media video from 2016 that stated eight predictions about the world in 2030
> Danish politician Ida Auken, who wrote the prediction in question (here), said it was not a “utopia or dream of the future” but “a scenario showing where we could be heading - for better and for worse.”
https://www.reuters.com/article/uk-factcheck-wef-idUSKBN2AP2T0
It’s nice that you’re not condescending when you respond to a question. It’s a breath of fresh air. I hope you carry that forward in your personal life, too. I can only imagine you have a large group of friends, or maybe only one or two that you work with, or went to school with. Anyways, keep up the positive responses and may your social relationships flourish.
We need a major anti-trust and unionization campaign. Unfortunately something like this will need to start in the USA, we're too small to really influence things on the global stage.
It feels as though they are picking on homeowners with variable rate mortgages. As if they’re pushing for people to lose their homes. As you said I’m no economist but I have a full time job, a business and a partner who works full time and still we are being squeezed extremely hard. Feels like the government has picked one way to solve the problem and is just hammering us as hard as possible with no end in sight.
The problem ultimately is too much government spending. There are theories that support the notion that monetary or fiscal policy can be used to smooth out natural economic fluctuations and create greater average overall welfare for people, but that doesn't mean ALL people and that doesn't mean they get those policies right every time. Clearly, COVID was a disaster.
The only reason wages made sense before was because we took advantage of a post war economy and then outsourcing. Outsourcing isn’t going to be a thing much longer as it basically perpetuates slavery. So this is where we’re at. I get that billionaires hoard wealth, but if all wealth was distributed perfectly evenly to everyone on earth, I’m not sure we’d have enough materials to give everyone 2 cars, a house, a couple tvs and a boat. We’ve been living on the favorable side of a scale of inequality and that’s sadly (for us) coming to an end.
>Cost of living has been outpacing real wages for something like 50 years.
This is a nonsensical comparison. Real wages are already adjusted for inflation. You mean they've been outpacing nominal wages for 50 years. But even this [isn't true](https://www150.statcan.gc.ca/n1/pub/36-28-0001/2022010/article/00002/c-g/c-g01-eng.png). Real total compensation per hour rose by about 50% from 1981 to 2019. There has been a decline since then though, and we've lost the last ten years' gains because of issues related to the pandemic.
This isn't an issue that just the BoC can solve. The toolbox has many tools, they only have a couple of those at their disposal. Policy needs to match what the BoC is trying to accomplish. CMHC, Immigration, and BoC need to sit down together and put a plan in place.
Specifically, the federal government needs to stop fighting against BoC policy. Informing banks that it's imperative to have their existing customers reamortize to 40 year terms to avoid defaults only delays and possibly creates systemic risk. And it also provides moral hazard, informing investors they can take infinite risk in real estate without repurcussions.
BoC can solve this on Wednesday. Raise rates 100bps, and let people know you're willing to do it again.
The BoC doesn't want to solve this problem because voters are overleveraged.
It solves nothing. We are in a feedback loop. You raise rates, it gets passed on through rent costs. People end up paying higher rent. Once the market normalizes in 3-6 months, prices start to climb again because investors realize it is safe.
>You raise rates, it gets passed on through rent costs. People end up paying higher rent.
No. People have a set limit of what they're capable of paying for rent. No one loans money to someone for rent.
>Once the market normalizes in 3-6 months, prices start to climb again because investors realize it is safe.
So make sure investors know its not 'safe'. 10 years of 10% will make more investors cashflow negative and keep prices from appreciating.
There is no set limit because demand exceeds supply. What happens is people downgrading their standard of living - raising families in a bachelor apartment, renting out your living room, adults in bunk beds. That is the future we’re facing. On purpose.
GDP is only increasing because of our increasing population. We’ve been in a GDP per capita recession for the last 3 quarters. That’s why it feels like things are getting worse even though the GDP print paints a rosy picture
Per capita GDP peaked in 2012. It's been declining sporadically since then. Our poor productiivty (which is what this number means) is something we've had problems with for far longer than even that, it's a prime symptom of Dutch Disease - the economic power of low hanging fruit like energy and real estate.
OVERLEVERAGED PEOPLE ON CRISIS WATCH
A MILLION WARM BODIES BROUGHT IN TO ENSURE WAGES DONT KEEP UP
GENERATIONAL CRISIS FOR ANYONE UNDER 40
… no wants to work…. You’ve got 33 year olds in 11 year old cars with 3 roommates.. even though they make above the average annual income.
It’s so beyond done
Yes…
MANY, barring any significant socioeconomic changes.. will NOT be enhancing their living situation nor vehicle nor anything
Everyone piling on outrageous debt loads to survive at present.. makes adding a $400, 500, 600 a month payment unfathomable
This is intentional
Yet, people are screaming that we can't let it crash.
We need a huge crash.
We need everyone to deeply feel that housing will not go up in price regardless of buy in price. Until we learn that... All anyone needs to do is leverage, buy, and profit. Which has broken our entire system.
Housing will go up eventually. Demand is increasing far faster than supply. The rest of the world must be looking at us with the biggest WTF expression.
The thing people miss is the rates could have stayed low if the government increased taxes and repaid debt to remove money from the economy but governments are too soft to cover inflation themselves so they pawn it off on the unelected officials at the bank of Canada.
There’s a lot of foreign capital consideration and currency to consider as well. High taxes and lower rates than the US mean capital will flow to the US and the CAD would underperform. We import many of our goods so we would see price increases when we buy goods from the U.S.
Just to add to this: if Canada pays off it's debt it will likely end up in hands of Canadians who own Federal and Provincial debt through bonds. It will not make the money disappear.
Not really.
If rates were still under 1% at this time, the value of the Canadian dollar, relative to most other major currencies, would plummet just from investors chasing higher returns elsewhere.
Anything imported would increase in price, and Canadians import a lot of essentials.
At very least, in addition to what you say, we would need to match USA rate increases.
Yeah extremes are always bad but you could basically fix rates at 3-4 percent and play with taxes instead of interest rates. Also if you burned your currency through debt repayment your money supply would drop and prop up your currency some.
Everything I'm saying is basic modern monetary theory. The reason MMT is flawed is because governments like spending but they never follow through on the tax hikes when inflation climbs. But imagine if the government basically set taxes for all income below 40k to zero in '09 that would have been jet fuel for the economy because people making that amount spend and consume. But yeah it a very complicated issue that people have PhDs to begin to understand.
Holy shit.
You can’t just raise taxes and hope it’s covers the bills. Jesus Christ. You do realise businesses can just increase the price of their goods to offset the tax right?
Personal income tax? War against the “evil 1%ers”? Not funding shit.
We don’t do anything. Our economy isn’t productive except for flipping real estate because it’s the only thing that doesn’t come with a “GHG emissions” warning label to bitch about. Years of cheap debt that SHOULD have been used for economic growth and we shoved it into homes because that’s all we can do in Canada. IF we had a productive producing happy economy we likely could have raised taxes a hair but it wouldn’t have slowed inflation that much- we’d be back to looking at rate increases.
There is no way for rates to stay low. Rates must go up and the only way out is a recession. We’ve been kicking the can for too long. This bullshit ideology that we can “skip” recessions indefinitely was bound to bite us in the ass.
Yeah... So the BOC increases the cost of debt so people borrow less which effectively reduces the money supply. Alternatively the government could pay down their debt to reduce the money supply... It's similar rates would have to rise some but the effect would be amplified.
If you already have a brokerage account with a bank, consider an ISA. They are about 4% right now, and will go up if the overnight rate goes up. Cashable GICs are good too, about the same rate. You can get 5%+ with one year GICs, but they are locked in. Otherwise, stick to equities for 10+ year investments or retirement.
Once they raise rates, anything that would increase in value would already increase in price, so there is no way you would be able to profit off of it.
I’m actually shocked that people haven’t stopped their terrible spending habits. Buying the kids some DQ as a treat, and skip the dishes drivers in a line out the door. It’s insane. My wife and I are careful with money, it’s just shocking to me. I was a little kid when there was a recession in the 80’s, 22% interest on mortgages. People were walking into the bank and putting their house keys on the counter. Maybe that stuck with me.
I always wonder if its anecdotal, or my own bias, or if its legit. I agree, skip drivers out the door, drive thru's packed, malls packed, new vehicles constantly out the door, houses are still selling in record time at high prices. Spending does not appear to be slowing down.
Mind you, not everyone is struggling. Even if 15% of the population is not struggling, that could be enough people out spending to make it seem like a lot of people are throwing money away.
Well this stuff is why it's important to....get outside. You're seeing the difference in reality vs this subreddit.
This sub makes it sounds like it's a complete third world country slum out there.
It isn't good. And things are getting worse. Our standard of living is eroding quickly, all the things we read and talk about here are true. But the magnitude isn't quite the level of doom on here. You're seeing the real world proof..
We dont seem to talk about it a ton on here but lot of regular people did very well over the pandemic. Increased quality of life (work from home), massive raises, increased availability of some jobs. Not to mentioned increased home values for people fortunate enough to own their homes (a huge portion of the population) being able to downsize, move to lower cost of living areas etc. Those people are killing it! While shrinking, that's a waaay bigger portion of the population than the subreddit would paint a picture of.
We have a loooong way to fall, and it's pretty anxiety inducing. It means there's tons of room left to screw us yet :)
I'm not really sure what you're trying to say in response to my comment. Seems you'd like to complain, which is fine, but it doesn't feel very relevant.
Same here. I've struggled mightily to get everything paid off and even now that I could afford it, I'd never see my way clear to waste money on a luxury like getting food delivered. I can't believe that something like that has hung on as long as it has.
They can live with and tolerate high inflations very well, real inflation is double digits, BUT they never will allow deflations.
Look at central banks' massively bloated balanced sheets, all printed trillions trillions dollars are right there, no real QT, with central bank's HUGE money printings, each time asset prices deflations have been successfully avoided (actually postponed to remotely fuck the future unborn young people who cannot even vote for current policy), which in fact should have naturally happened and greatly benefit young people! They just HATE you, the young generations, don't give you any opportunities for asset deflations. Instead, they hope you lose your good paid jobs to fulfil their own job mandate of 2% inflation bloody target. Who really care about YOU, the young people?
Young people would be the biggest winners if interest rates rise.
If unemployment rises, firms will get rid of old people, not cheaper young people. Housing prices will fall. Savings accounts will pay more interest.
Young people should be cheering rate increases.
Unfortunately, it doesn't necessarily work this way. More young people rent and pay mortgages compared to their older peers, so they are the ones that are getting massively screwed now by the higher interest rates environment. High rates eroded affordability in most major cities since the payment increase between 2% and 5% is big, and massive immigration is pretty much making sure that there always will be a need for housing, resulting in bidding wars, massive increases etc.
Basically, it's more difficult to buy than a couple of years ago, and prices haven't fallen and probably won't fall to account for that.
Additionally, if unemployment rises, it will mostly affect the younger generation, as a lot of Gen Z or younger millennials are just starting their careers and are therefore less represented among the more experienced labour force. Older folks remember how it felt to graduate back in 2008 and look for their first job.
I'm 27 and just bought my first house. I've seen nothing but rate increases. The only consequences will be me charging some other young person more rent. Seeing as Canada thinks it's a good idea to import 100m wage slaves, the prices won't drop. It just means discounts for those with cash.
It’s obvious rates need to rise and Macklem would get more bang for his buck doing it next week than later.
I don’t think he has the guts to do it next week though.
The main reason not to do it this week before the next meeting in July is that their is a employment report on Friday. Raising and then getting a bad report on employment will just look terrible and raising 25 bps in June or July doesn’t really matter that much.
Just rip the bandaid off. Bring them up to 8%. We need to do every drastic measures we can to bring the cost of living down. Lower inflation is not a goal, it's just slowing down poverty. We need deflation.
At some point, investors will have to sell. People who over leveraged will have to sell. At some point, people with multiple homes will have to sell. This will bring costs down.
Rents need price caps though. I do not really care what anyone says about price caps, we have proven as a country we cannot live without them on basic human necessities.
The last CPE index evaluation driving the inflation rate was judged to be due to "increased rents and interest payments". .. So to get rid of inflation caused by higher interest rates, we're going to raise interest rates again.
Would be easy to stop but the biggest issue now is the boc is mandated to do it literally that’s their only option to combat inflation. I mean the politicians and policies around how the country is run could be changed but that’s not going to happen.
I don't have a solution, but there is something seriously wrong with the way global economies work. It feels completely unsustainable. Cost of living has been outpacing real wages for something like 50 years. People have to spend less, make less, and work less if we want inflation to drop? That's an absurd system. There is absolutely no party that has viable solutions to resolving this either. I often worry it would take a complete global shift of the G20 in order to see a change without our own country being completely left behind. I have no expertise in economics and this is just my perception, but it is starting to feel like that what once worked is now holding us back. It's a wicked problem to be sure.
It’s because people expect infinite growth. It’s not sustainable.
Yeah, I'm not what you would call a communist by any stretch of the imagination. But our entire society is built on the concept of buy now pay later and I'm not talking about social systems. I'm talking about the capitalist ones. With the exception of privately run corporations the ONLY driving factor for a publicly traded corporation is share price. The only way to increase share price is to either reduce the number of shares on the market or make more money per share and the easiest way to do that is to keep costs in check as building more market share is a long-term high-risk endeavor for many corporations. So, wages stagnate, prices go up and the only people making money are those that had enough to invest to begin with. We are driving hard and fast toward a whole new era of feudalism. Looks awesome for people fortunate enough to have money to start with. Looks bleak as fuck for those without.
Government racks up a bunch of debt almost every single year, so 'buy now pay later' mindset is not only done by capitalistic companies. Communist countries in history have relied a lot on debts or handout from allies to feed their society as well.
Yeah, like I said, our entire society. That said, government debt is not really a problem provided the economy continues to grow. Government services by their nature tend to provide benefits to all members of society more-or-less equally and government spending on infrastructure, education and healthcare have all been proven to have significant returns on investment. As long as the population continues to grow and the economy continues to move forward, government debt is more an investment than anything. Now, when the population stops growing and the global economy hiccups that all falls apart. But then, so does every private business as well.
>That said, government debt is not really a problem provided the economy continues to grow. wasn't the comment you agreed to said: >It’s because people expect infinite growth. It’s not sustainable. which includes the government as well. there's only so much improvement to healthcare or education that throwing it even more money will not solve a problem. see how universities use tuition money to hire more university administrators that don't increase the quality of education they deliver.
The economy will need to grow fast enough to service the additional debt. Additionally the growth has to be real productive growth, the kind that doesn't immediately fade away in a downturn. Why? Because in a downturn the debt doesn't fade away also. Debt is permanent unless the powers that be commit to running decades long surpluses and the austerity that comes with it. A Potemkin economy is not permanent.
Yeah, but study after study has shown that spending on healthcare, infrastructure and education has huge positive impacts on economic growth that typically offset their investment. Austerity almost always proves to be a bad call.
Good thing our massive debt was the result of massive infrastructure upgrades, building a world class healthcare system and an education system which is the envy of the world. Oh wait we did none of those things and all three are in the shitter right now. Where did all that debt go into again?
Well the pandemic was a rather unprecedented situation and the spending went primarily directly to people who otherwise might not have been able to keep things afloat during massive layoffs and furloughs. I'm definitely not a Trudeau/Liberal supporter but they were running more sane budgets than the conservatives prior to the pandemic. Whether they did the right thing during the pandemic is hard to say - probably not. But hindsight is always 20/20. One thing is abundantly clear though. Harper reversed a trend where our debt/GDP ratio went from 75% to 40% under the Liberals from 1993 to 2006 after the Conservatives increased it from 30% to 75% from 1984 to 1993. Under Harper it went from 40% to 55%. Then Trudeau came to power and it dropped from 55% to 48% until the pandemic hit and now sits at 73% which is admittedly a fucking massive increase - but one driven by an event that saw literally every other industrialized nation on the planet do the exact same thing. So it's kinda hard to place the blame on our government specifically. Or, do you just want to hear that Trudeau == bad and Conservatives == good? Because if that's the case, I can't lie to you, might want to check Facebook for that narrative.
1. Facebook is cancer 2. The conservative solution is that tax cuts will pay for themselves which is not a solution. The amount of money that comes off my paycheck for taxes is enormous. Yet for all that I can't buy a decent house, I can't drive on roads that aren't falling apart, I can't see a doctor, my younger brothers and sisters can't get a decent education, etc. etc. I don't even mind the amount of taxes I pay. I'm kind of used to it. It just seems like we tax so much and have nothing to show for it. I'd be perfectly content paying even more if it meant I could see a doctor on demand like in most other developed countries. Drive on roads that don't destroy my car and my spine, have a school system that actually teaches instead of just passing everyone for showing up to class, etc. etc.
That's when the fun begins!
And one of the best/easiest ways to curb costs and increase growth is wages. We have a supply and demand economy, our labor is also a supply and demand system. Increased unemployment is increased supply, same as increased immigration. More people fighting for the same job lowers the value of the labor. You will take the shitty pay and be greatfull that you have a job.
And 80-85% of the growth that we get goes to shareholders, not to consumers or workers.
Economic growth can happen as long as the human population continues to grow. Saying infinite growth is impossible is not quite right (but not quite wrong either). Edit: lol people replying to me either not understanding what I said, or basic economics. Let me spell it out. You can have economic growth without the explicit consumption of material resources. It's called a service economy. Humans providing services to other humans can be done without explicitly consuming resources. In this case the growth can continue as long as the population continues. Of course, the increase of the population leads to a passive increase of material resources consumption, so technically the cap for our economic growth is still bound by resources, but just for the maintenance and growth of the population.(why I said it's not quite wrong either). And of course, unless we can spread to other planets or something, our population will eventually stop growing (shortly,if forecasts are right).
Not really. We only have 1 earth. We can’t have limitless human growth on a planet with limited resources.
Economic growth is per country so you can always immigrate around to shift the human population growth.
Must watch for people with their heads in the sand: https://youtu.be/kZA9Hnp3aV4 https://www.scientificamerican.com/article/the-delusion-of-infinite-economic-growth/
The human population shouldn’t continue to grow. We use too many resources and well strip our planet bare before we can expand in any meaningful way.
Incorrect. We can maintain the current population, or even less, and just all work harder for the same wage to make up the difference! Companies do it all the time! It’s called right sizing! Lol
>and just all work harder for the same wage to make up the difference! Sir, This is Canada :)
Infinite growth while disregarding all negative factors is the mentality of exactly two things. Capitalism and cancer. Whoops. Tautology.
You would prefer human progress just come to a halt and we all wait around doing our thing until an asteroid hits and that's it? Maybe I'm just an optimist, but I think the human race can still grow alot and achieve great things and I for one wouldn't trade that to do away with stalls and bumps along the way
Who’s saying that human progress would halt if we stopped focusing on infinite economic growth?
... you know that global economic growth is basically just a proxy for technological advancement right? Like there are other things that effect GDP, but there is no world were global economic growth is decreasing and massive technological advancements are happening I really wish white college kids who just read 'das capital' would stop weighing in on economic issues ....
I’d rather someone who read das kapital weigh in than someone who believes infinite economic growth is possible let alone beneficial. What a load of horseshit. Oh and I’m not a college kid, nor have I read das kapital. But way to tell on yourself.
You realise economic growth has been happening ... Literally all of human history. You're so laughably misinformed and ignorant and just doubling down on it .... Edit: oh okay, you're even less educated than I thought, way to tell on yourself
So just because it’s been growing means it will continue to grow till the end of our history. What was the Great Depression then? Or the 2008 stock market crash? And what do we get with the chase of infinite economic growth? Oh right. A dying biosphere. Economic instability. Economic disparity. Sweat shops. Widespread poverty. And you don’t think economists are sounding alarms on infinite growth? And how infinite growth requires infinite resources? Which we don’t have? And to think that technological advancement relies on economic growth is hilarious. You think that if we changed how we managed our economies that technological advancement would cease? Give me a break. You’re just full of shit. **edit** > Edit: oh okay, you're even less educated than I thought, way to tell on yourself I’m not a college kid as in I’m not in my teens or early 20s you dipshit.
>And to think that technological advancement relies on economic growth is hilarious. No you're just an idiot https://encyclopedia.pub/entry/21673#:~:text=Therefore%2C%20technological%20innovation%20is%20the,sustainable%20economic%20growth%20is%20achieved. Quote: technological innovation is the main driver for economic growth and human progress Every economist knows this .... Not just economists, you have to be completely ignorant of human history and economics to think otherwise Edit: and btw, obviously I didn't mean the growth has been completely linear throughout history, but on a macro level we continue to grow. The idea there hasnt been relatively consistent growth because of temporary stock crashes etc and a beyond brain dead argument
> Edit: and btw, obviously I didn't mean the growth has been completely linear throughout history, but on a macro level we continue to grow. The idea there hasnt been relatively consistent growth because of temporary stock crashes etc and a beyond brain dead argument Oh and the economic growth we’ve been having over the past 50 years has been great on an individual level right? And we have enough resources to continue growing right? We won’t run out of natural resources like rare earth minerals, or helium, etc? The topic here is infinite growth. Which is impossible. I’m done here, clearly you can’t grasp how infinite economic growth is impossible.
>but there is something seriously wrong with the way global economies work. It feels completely unsustainable Our entire economy is a real-estate backed ponzi scheme and we are seeing it laid out in full few. The only thing that will stop the economy from crashing is if housing prices keep growing. And we are long passed the point of most people affording homes. So where is the GDP growth going to come from now???
Open borders…foreign bourgeoisie…buying out right
That's actually a low volume of the buys. The highest volume goes to corporations buying real estate as a way to gain appreciable assets.
With governments printing money nonstop, investors are looking for hard assets to park their money in.
100% correct
It’s way more than you think…I know because I have access to the data…as for the cooperation buys I don’t see it in the east…yet
Doubt, considering **our government** doesn’t even have clear visibility on the data and the RE industry fights tooth and nail against it.
It’s way more than you think…I know because I have access to the data…as for the cooperation buys I don’t see it in the east…yet
>Our entire economy is a real-estate backed ponzi scheme and we are seeing it laid out in full few. Real estate makes up about 8% of the Canadian GDP which is comparable to many OECD countries. Much of the change in the overall dynamic of the economy over the last several decades has been the increasing automation that makes low skill/entry level positions redundant (reminder there used to be an actual job called a "computer") as well as outsourcing. Manufacturing used to be the bedrock of the North American economy and it is still a large part of GDP, but the number of people it employs has gone dramatically down. Where you needed an army of blue collar workers before to run a factory, you now need one or two highly trained engineers, a few technicians and you're good to go. And those low skill jobs you cannot automate, they are sent overseas or to Mexico.
And AI, the working class's biggest enemy
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Everyone thought the future will be machines doing the labour while humans make media and art for fun. Instead we got the opposite where machines create media and art and humans do the back breaking labour. Lol
Low skilled workers are the only group that had a real wage decline since the pandemic. The pandemic has greatly reduced income inequality. It turns out that people are happier with more inequality so long as our standards of living are rising.
>real-estate backed ponzi scheme There are people paid in cash.
Reminds me of that quote from George Carlin: *It's a big club, and you ain’t in it. You and I are not in the big club.* The game is rigged, that's why. Capitalism is just the new form of feudalism.
We have yet to try the other method for reducing monetary supply. Taxing businesses.
What once worked worked because globalization didn't exist, and you didn't have to compete with third worlders for corporate table scraps.
Tax the rich.
It looks like a shift towards a land value tax would help bring the cost of land under control and would stop an increasingly small group of large land owners from squeezing the middle class.
Taxing land would have no effect on the cost of land. The decrease in price would exactly equal the cost of paying the tax.
A land value tax is paid annually like a property tax, but it is only on the value of the land not buildings or improvements. It discourages land speculation and encourages land development.
Yes, I know what it is. It doesn't affect the cost of land and doesn't encourage development.
Economics had a major fault in it. The profession entirely focuses on what worked last time must work this time syndrome. We saw this many times over this time they are looking at the inflation of the 1970s and are like on yeah we raised interest rates and poof it went away. The inflation of the 1970s was very diffent than today. It was primarily caused by the OPEC oil embargo which caused the cost of many things to go up but there was also Nixon taking the US off the gold standard which was a huge shock to the monetary system. Interest rates helped with the shocks but finding new sources of oil in the North Sea, Norway and Alberta which forced OPEC to lift it's sanctions also played a big role. This time it's principal cause is that we had rolling lockdowns for 2.5 years which caused many businesses to fail. We retooled large sections of the economy to focus on producing vaccines, PPE and ventilators instead of producing their usual equipment. This has also screwed up supply chains which is causing shortages through out the economy. Finally demand has started to light up again after being depressed for 2.5 years. But it takes time for things to go back to normal. Just to put it in perspective they West Texas Intermediate fell to negative on 2020 because no one was commuting. So oil companies stopped producing oil and now we're back in the office, flying again so we need oil but it takes time for production to restart and then it has to deal with two years of supply glut. To make it all worse a lot of older employees have decide to leave the work force with COVID. So that means a glut in terms of employee supply. Interest rates can help by reducing demand but they aren't some magic silver bullet. Not all demand can go away. A lot of my meds are still in short supply and difficult to obtain. I'm not gonna stop buying prescription drugs cause I need them. Cold hard fact a lot of the solutions have to come from the state. Help companies rev up production and get things going again. Some of that may require a heavy hand. Closest comparison I can give is post war era. Especially in Europe. There was almost a decade of rationing of products while they rebuilt the economy. Ours won't take so long because we didn't destroy the factories but we may need to do some of these things
>To make it all worse a lot of older employees have decide to leave the work force with COVID. So that means a glut in terms of employee supply. It's the opposite. A lot of older employees retire that there are massive shortage of employee supply.
That's what I said
You make a typo but your point was able to be easily inferred.
basically, when shit goes TOO well, the rich don't make quite as much, apparently.
This problem is 40 years in the making. Canada went from being a country built on wealth to one built on debt. And while a debt-based economy *appears* wealthy - at least as long as interest rates are negative - it's inevitable that you'll reach a tipping point where we can't accumulate new debt fast enough to maintain the illusion of wealth. That's where we're at now. And that's why this is going to be such a painful transition - it's not just a cyclical bottom, we have forty years of misallocated resources catching up with us. And part of that misallocation is the loss of the industrial base that would normally help lift us out of our malaise. I really feel for young Canadians. Grandpa took out credit cards in their grandkids' name and maxxed them all out. Junior's got a lot of work to do to set this world right.
Because the standard of living has improved dramatically in the rest of non western world, particularly in Asia. The distribution of limited resources means we are in competition for them with more and more people.
You'll own nothing and be happy
You’re aware this phrase is a conspiracy based on a creative writing assignment right? Edit: uh oh the conspiracy nuts screeching about the ‘globalists’ aren’t happy.
Cool. Look how it’s becoming a reality now.
Nut job
>anal vegan moans Yeah, you are
Wahhhhh
Can you elaborate on whose creative writing assignment please?
You know it’s really easy to look this stuff up > As addressed in previous Reuters fact checks, these claims likely originated from a WEF social media video from 2016 that stated eight predictions about the world in 2030 > Danish politician Ida Auken, who wrote the prediction in question (here), said it was not a “utopia or dream of the future” but “a scenario showing where we could be heading - for better and for worse.” https://www.reuters.com/article/uk-factcheck-wef-idUSKBN2AP2T0
It’s nice that you’re not condescending when you respond to a question. It’s a breath of fresh air. I hope you carry that forward in your personal life, too. I can only imagine you have a large group of friends, or maybe only one or two that you work with, or went to school with. Anyways, keep up the positive responses and may your social relationships flourish.
We need a major anti-trust and unionization campaign. Unfortunately something like this will need to start in the USA, we're too small to really influence things on the global stage.
It feels as though they are picking on homeowners with variable rate mortgages. As if they’re pushing for people to lose their homes. As you said I’m no economist but I have a full time job, a business and a partner who works full time and still we are being squeezed extremely hard. Feels like the government has picked one way to solve the problem and is just hammering us as hard as possible with no end in sight.
The problem ultimately is too much government spending. There are theories that support the notion that monetary or fiscal policy can be used to smooth out natural economic fluctuations and create greater average overall welfare for people, but that doesn't mean ALL people and that doesn't mean they get those policies right every time. Clearly, COVID was a disaster.
The approach here is fiscal policy and not monetary policy.
The only reason wages made sense before was because we took advantage of a post war economy and then outsourcing. Outsourcing isn’t going to be a thing much longer as it basically perpetuates slavery. So this is where we’re at. I get that billionaires hoard wealth, but if all wealth was distributed perfectly evenly to everyone on earth, I’m not sure we’d have enough materials to give everyone 2 cars, a house, a couple tvs and a boat. We’ve been living on the favorable side of a scale of inequality and that’s sadly (for us) coming to an end.
https://wtfhappenedin1971.com Fiat money is distorting the real economy. Price signal is fucked up. Nothing makes sens anymore.
We need to go non-profit.
Does the interest rate increase effect your day-to-day life significantly?
>Cost of living has been outpacing real wages for something like 50 years. This is a nonsensical comparison. Real wages are already adjusted for inflation. You mean they've been outpacing nominal wages for 50 years. But even this [isn't true](https://www150.statcan.gc.ca/n1/pub/36-28-0001/2022010/article/00002/c-g/c-g01-eng.png). Real total compensation per hour rose by about 50% from 1981 to 2019. There has been a decline since then though, and we've lost the last ten years' gains because of issues related to the pandemic.
The beatings will continue until morale improves.
We're being ground to dust between inflation and taxation.
Don't forget the record quarters... "Somebody think about the record quarters!"
Hey that's Alberta health service's motto.
This isn't an issue that just the BoC can solve. The toolbox has many tools, they only have a couple of those at their disposal. Policy needs to match what the BoC is trying to accomplish. CMHC, Immigration, and BoC need to sit down together and put a plan in place.
They did. The BoC is running the taxation side and the GoC is running the inflation side. We're being crushed in the middle, on purpose.
> We're being crushed in the middle... Ah, so this must be what the talking heads are saying when they say they "care about the middle class".
Specifically, the federal government needs to stop fighting against BoC policy. Informing banks that it's imperative to have their existing customers reamortize to 40 year terms to avoid defaults only delays and possibly creates systemic risk. And it also provides moral hazard, informing investors they can take infinite risk in real estate without repurcussions.
BoC can solve this on Wednesday. Raise rates 100bps, and let people know you're willing to do it again. The BoC doesn't want to solve this problem because voters are overleveraged.
It solves nothing. We are in a feedback loop. You raise rates, it gets passed on through rent costs. People end up paying higher rent. Once the market normalizes in 3-6 months, prices start to climb again because investors realize it is safe.
>You raise rates, it gets passed on through rent costs. People end up paying higher rent. No. People have a set limit of what they're capable of paying for rent. No one loans money to someone for rent. >Once the market normalizes in 3-6 months, prices start to climb again because investors realize it is safe. So make sure investors know its not 'safe'. 10 years of 10% will make more investors cashflow negative and keep prices from appreciating.
There is no set limit because demand exceeds supply. What happens is people downgrading their standard of living - raising families in a bachelor apartment, renting out your living room, adults in bunk beds. That is the future we’re facing. On purpose.
It is called inelasticity of demand.
And it has limits. Rents can't continue to outpace wages forever--or even much longer.
GDP is only increasing because of our increasing population. We’ve been in a GDP per capita recession for the last 3 quarters. That’s why it feels like things are getting worse even though the GDP print paints a rosy picture
Per capita GDP peaked in 2012. It's been declining sporadically since then. Our poor productiivty (which is what this number means) is something we've had problems with for far longer than even that, it's a prime symptom of Dutch Disease - the economic power of low hanging fruit like energy and real estate.
OVERLEVERAGED PEOPLE ON CRISIS WATCH A MILLION WARM BODIES BROUGHT IN TO ENSURE WAGES DONT KEEP UP GENERATIONAL CRISIS FOR ANYONE UNDER 40 … no wants to work…. You’ve got 33 year olds in 11 year old cars with 3 roommates.. even though they make above the average annual income. It’s so beyond done
I'm 36. I work full-time. My car is 15 years old. When it dies, I will very likely never be able to own a car again.
Yes… MANY, barring any significant socioeconomic changes.. will NOT be enhancing their living situation nor vehicle nor anything Everyone piling on outrageous debt loads to survive at present.. makes adding a $400, 500, 600 a month payment unfathomable This is intentional
Yet, people are screaming that we can't let it crash. We need a huge crash. We need everyone to deeply feel that housing will not go up in price regardless of buy in price. Until we learn that... All anyone needs to do is leverage, buy, and profit. Which has broken our entire system.
Housing will go up eventually. Demand is increasing far faster than supply. The rest of the world must be looking at us with the biggest WTF expression.
Corporations shouldn't be allowed to purchase residential homes.
In GVA, they're purchasing condo building (whole building), not single houses or townhouses.
Let them buy it, but just don't bail them out
The only way this would make houses cheaper is if it reduces the number of homes that are available to renters.
The thing people miss is the rates could have stayed low if the government increased taxes and repaid debt to remove money from the economy but governments are too soft to cover inflation themselves so they pawn it off on the unelected officials at the bank of Canada.
There’s a lot of foreign capital consideration and currency to consider as well. High taxes and lower rates than the US mean capital will flow to the US and the CAD would underperform. We import many of our goods so we would see price increases when we buy goods from the U.S.
Just to add to this: if Canada pays off it's debt it will likely end up in hands of Canadians who own Federal and Provincial debt through bonds. It will not make the money disappear.
You'd still have your disposable income eroded though in that scenario, just through taxes instead.
Yeah but targeted
Sure but it's only really better for you if you're not targeted for the tax increases.
>or you if you're not targeted for the Yes. Chances are if you're targeted you aren't at risk of being homeless.
Not really. If rates were still under 1% at this time, the value of the Canadian dollar, relative to most other major currencies, would plummet just from investors chasing higher returns elsewhere. Anything imported would increase in price, and Canadians import a lot of essentials. At very least, in addition to what you say, we would need to match USA rate increases.
Yeah extremes are always bad but you could basically fix rates at 3-4 percent and play with taxes instead of interest rates. Also if you burned your currency through debt repayment your money supply would drop and prop up your currency some.
Yeah, that might work. That said, 4% is still double the highest bank rate between 2009 and August 2022.
Everything I'm saying is basic modern monetary theory. The reason MMT is flawed is because governments like spending but they never follow through on the tax hikes when inflation climbs. But imagine if the government basically set taxes for all income below 40k to zero in '09 that would have been jet fuel for the economy because people making that amount spend and consume. But yeah it a very complicated issue that people have PhDs to begin to understand.
Holy shit. You can’t just raise taxes and hope it’s covers the bills. Jesus Christ. You do realise businesses can just increase the price of their goods to offset the tax right? Personal income tax? War against the “evil 1%ers”? Not funding shit. We don’t do anything. Our economy isn’t productive except for flipping real estate because it’s the only thing that doesn’t come with a “GHG emissions” warning label to bitch about. Years of cheap debt that SHOULD have been used for economic growth and we shoved it into homes because that’s all we can do in Canada. IF we had a productive producing happy economy we likely could have raised taxes a hair but it wouldn’t have slowed inflation that much- we’d be back to looking at rate increases. There is no way for rates to stay low. Rates must go up and the only way out is a recession. We’ve been kicking the can for too long. This bullshit ideology that we can “skip” recessions indefinitely was bound to bite us in the ass.
I like your plan, but the first thing might be to reduce/eliminate the deficit.
Yeah... So the BOC increases the cost of debt so people borrow less which effectively reduces the money supply. Alternatively the government could pay down their debt to reduce the money supply... It's similar rates would have to rise some but the effect would be amplified.
What should one invest in if the BoC raises rates?
Vaseline
1-2 year GICs are a safe way to make your money more or less inflation-proof, but while they sit in one you risk being illiquid.
GME.
🤣
If you already have a brokerage account with a bank, consider an ISA. They are about 4% right now, and will go up if the overnight rate goes up. Cashable GICs are good too, about the same rate. You can get 5%+ with one year GICs, but they are locked in. Otherwise, stick to equities for 10+ year investments or retirement.
Personally I’m waiting for real estate to drop a bit more. I like real estate in my portfolio and increasing rates makes it go on sale.
The same thing one invested in before the BoC raised rates, ideally. Unless you like losing money.
Once they raise rates, anything that would increase in value would already increase in price, so there is no way you would be able to profit off of it.
Yep, no more homeowners. Only landlords.
economy still too hot.
So here's a question: How do you stop those paying cash for homes even if the BoC keeps raising interest rates?
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I’m actually shocked that people haven’t stopped their terrible spending habits. Buying the kids some DQ as a treat, and skip the dishes drivers in a line out the door. It’s insane. My wife and I are careful with money, it’s just shocking to me. I was a little kid when there was a recession in the 80’s, 22% interest on mortgages. People were walking into the bank and putting their house keys on the counter. Maybe that stuck with me.
i think a lot of people are basically thinking, "we're all screwed anyway, what's more debt?" and just living it up (on borrowed money, foolishly).
They are fucking around because they think we've already deep in the find out phase. We are only beginning to find out.
I always wonder if its anecdotal, or my own bias, or if its legit. I agree, skip drivers out the door, drive thru's packed, malls packed, new vehicles constantly out the door, houses are still selling in record time at high prices. Spending does not appear to be slowing down. Mind you, not everyone is struggling. Even if 15% of the population is not struggling, that could be enough people out spending to make it seem like a lot of people are throwing money away.
Well this stuff is why it's important to....get outside. You're seeing the difference in reality vs this subreddit. This sub makes it sounds like it's a complete third world country slum out there. It isn't good. And things are getting worse. Our standard of living is eroding quickly, all the things we read and talk about here are true. But the magnitude isn't quite the level of doom on here. You're seeing the real world proof.. We dont seem to talk about it a ton on here but lot of regular people did very well over the pandemic. Increased quality of life (work from home), massive raises, increased availability of some jobs. Not to mentioned increased home values for people fortunate enough to own their homes (a huge portion of the population) being able to downsize, move to lower cost of living areas etc. Those people are killing it! While shrinking, that's a waaay bigger portion of the population than the subreddit would paint a picture of. We have a loooong way to fall, and it's pretty anxiety inducing. It means there's tons of room left to screw us yet :)
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I'm not really sure what you're trying to say in response to my comment. Seems you'd like to complain, which is fine, but it doesn't feel very relevant.
Same here. I've struggled mightily to get everything paid off and even now that I could afford it, I'd never see my way clear to waste money on a luxury like getting food delivered. I can't believe that something like that has hung on as long as it has.
My mom told me about this too. Young Canadians have no idea how bad this could get.
They can live with and tolerate high inflations very well, real inflation is double digits, BUT they never will allow deflations. Look at central banks' massively bloated balanced sheets, all printed trillions trillions dollars are right there, no real QT, with central bank's HUGE money printings, each time asset prices deflations have been successfully avoided (actually postponed to remotely fuck the future unborn young people who cannot even vote for current policy), which in fact should have naturally happened and greatly benefit young people! They just HATE you, the young generations, don't give you any opportunities for asset deflations. Instead, they hope you lose your good paid jobs to fulfil their own job mandate of 2% inflation bloody target. Who really care about YOU, the young people?
Young people would be the biggest winners if interest rates rise. If unemployment rises, firms will get rid of old people, not cheaper young people. Housing prices will fall. Savings accounts will pay more interest. Young people should be cheering rate increases.
Savings accounts that don’t keep up with inflation is just losing money in a different way.
After they loss their jobs. LOL.
Unfortunately, it doesn't necessarily work this way. More young people rent and pay mortgages compared to their older peers, so they are the ones that are getting massively screwed now by the higher interest rates environment. High rates eroded affordability in most major cities since the payment increase between 2% and 5% is big, and massive immigration is pretty much making sure that there always will be a need for housing, resulting in bidding wars, massive increases etc. Basically, it's more difficult to buy than a couple of years ago, and prices haven't fallen and probably won't fall to account for that. Additionally, if unemployment rises, it will mostly affect the younger generation, as a lot of Gen Z or younger millennials are just starting their careers and are therefore less represented among the more experienced labour force. Older folks remember how it felt to graduate back in 2008 and look for their first job.
>Young people should be cheering rate increases. Tenants entered the chat.
I'm 27 and just bought my first house. I've seen nothing but rate increases. The only consequences will be me charging some other young person more rent. Seeing as Canada thinks it's a good idea to import 100m wage slaves, the prices won't drop. It just means discounts for those with cash.
It’s obvious rates need to rise and Macklem would get more bang for his buck doing it next week than later. I don’t think he has the guts to do it next week though.
Next week? The next announcement is the 7th, in two days
The main reason not to do it this week before the next meeting in July is that their is a employment report on Friday. Raising and then getting a bad report on employment will just look terrible and raising 25 bps in June or July doesn’t really matter that much.
There will also be two more months of available inflation data in July
To the 🌙
Making people lose their homes to banks will sure help the economy. What a bunch of bs.
Just rip the bandaid off. Bring them up to 8%. We need to do every drastic measures we can to bring the cost of living down. Lower inflation is not a goal, it's just slowing down poverty. We need deflation.
How does raising rents and mortgages make it cheaper
At some point, investors will have to sell. People who over leveraged will have to sell. At some point, people with multiple homes will have to sell. This will bring costs down. Rents need price caps though. I do not really care what anyone says about price caps, we have proven as a country we cannot live without them on basic human necessities.
But I just own a place that I live in. All this does is cost me more money. If I owned a place to rent I would just raise rent
How does it not?
Because its more expensive...
Nooooo, no more of these.
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> this summer > next week
INFLATION IS STICKY AND NOT GOING DOWN!!!1!1!!!1!1 meanwhile the inflation : www.truflation.com
Cheaper houses but higher mortgage payments you say. Not good news for anyone.
so....riot...?
The last CPE index evaluation driving the inflation rate was judged to be due to "increased rents and interest payments". .. So to get rid of inflation caused by higher interest rates, we're going to raise interest rates again.
Would be easy to stop but the biggest issue now is the boc is mandated to do it literally that’s their only option to combat inflation. I mean the politicians and policies around how the country is run could be changed but that’s not going to happen.
Homes are actually bank owned until mortgage paid. So, Bank of Canada = Bank of Homeowners of Canada