As the pandemic passes, will puppies get cheaper? How about plywood? Or properties?
These are odd days. The virus hit. The economy cratered. Government freaked. Jobs were lost. Lockdowns, quarantines and restrictions hit, which are only now (15 months later) being peeled back. And yet during this time the price of almost everything swelled like a zit before the prom.
You know all about real estate. Up 30% nationally in the past year. Building materials are crazy. Foods’s taking off. Supply chain disruptions have goosed the price of boats to bathtubs, RVs and exercise equipment. Officially inflation in the US has hit 5% (the historic average is more like 2%) the most since 2008. In Canada it’s 3.4%, the highest in a decade, but not reflective of reality
Meanwhile the federal government has spent $400 billion more than it collected, adding the difference to the national debt. It’s over a trillion and rising daily. The Bank of Canada spends $3 billion a week buying bonds in order to suppress interest rates. This has created a ton of new money. Look at this…
More debt. More printing. More money supply in Canada.
When there’s more of something, the price goes down because it’s less scarce or valuable. So it takes a greater amount of that thing to equal what value it had in the past. Yup, that’s inflation. The more money in existence, the less each dollar’s worth and the more of them required to get, say, a golden retriever.
Check out some recent comments by CIBC econoguy Benny Tal :
“Nobody knows where inflation will be six months from now. When I say nobody, I include the Bank of Canada and The Fed in that nobody. At this point, the narrative from the Bank of Canada and The Fed is ‘Yes, we know inflation is rising, but it is going to be short-lived. Maybe that’s correct, but they don’t know…. Money supply is rising like there is no tomorrow.”
Tal also thinks all this inflation, spending, money-printing and political profligacy will bite us big. “To me that is the No. 1 risk facing the economy and the market: a very rapid pace of increase in interest rates.”
What can turn current inflation into something worse? A torrent of spending. The unleashing of built-up pandemic savings. More government gushing. And the expectation by people that prices are romping higher, so they’d better buy now. That’s where FOMO comes from – a fear which ignites and accelerates buying decisions, causing people to jump in even when asset values have exploded, since they fret those prices will go higher.
Of course the rapid pace of vaccinations (75% of the herd will be fully dosed by Labour Day) and the relentless reopening of provincial economies will accelerate this. The service sector will come alive. Unemployment will crash. Wages increase. Commodity prices are rising because of increased global demand. Plus you have carbon taxes, a federal election and higher personal taxes after that to factor in.
This has led people on this blog to conclude: (a) cash is trash. Might was well spend it. (b) Hard assets like real estate are a shelter from the storm. (c) Liquid, financial portfolios can’t keep up. And, (d) we’re on the path to hyperinflation.
This is bunkum. But it will take many months – maybe a year or two – for it to become obvious we have the opposite problem. First, understand what hyperinflation is – excessive, out-of-control price hikes typically of 50% a month or more. This happens in wars, times of economic depression, rampant political corruption or when a population completely loses faith in the currency, leading to hoarding, shortages and chaos. Money becomes worthless. CBs print even more of it. People stop saving or paying debts. Banks crumble.
Ain’t happening here. Nor will it. Ever.
Forget inflation. This is what to expect.
Here’s a more likely scenario.
Inflation continues to rise as the pandemic fades. The central bank later this year (maybe starting next month) trims its bond-buying further and eliminates it by Christmas. Consumer prices and real estate swell more until vaccination rates deliver overall immunity and Covid is gone, gone, gone from the daily newsfeed. Mr. Socks wins the October election. In April the budget delivers a tax jolt which the bond market demands. This happens around the time the CB decides inflation’s a threat requiring higher rates. As interest levels increase money becomes more valuable, not less. Savers are encouraged. Borrowers pay more. Asset values moderate.
Meanwhile the deflationary influence of technology continues. Every month productivity goes up as more industries automate, reduce operating costs and replace dithering humans with flawless AI. Technology eats inflation. It allows production to be scaled-up to meet rising demand without increasing costs. This lets retailers trade bricks and HVAC overhead for a web site and a shipping agent, for example. Banks will close hundreds of branches. Government service counters will be kaput. One legacy of Covid and WFH has been to digitize the entire population, proving the economy can function when 25% of all workers stopped going to work.
We live in the cloud now. So what if the next big thing is deflation?
Get used to the idea. It’s the future. The cloud is a platform of innovation allowing programmers access to computing power that was a dream just a few years ago. As computing costs deflate, so do others. Manufacturing expenses and payrolls fall. Services become targeted and more cost-effective. Robots never sleep or get sick or hungover or need time off or require pensions. Deflation is all around us now, masked by the bits of life that are high-profile, inflationary (and transient) like housing.
Consider the massive debt created by governments in Canada, the US and around the world, plus all the quantitative easing, the bond-buying, the fiscal and monetary stimulus, the rock-bottom rates which are actually negative. All of this – wholly unprecedented – has barely boosted inflation. More debt, more spending and more stimulus is unlikely to change it. Deflation is as powerful as it is stealthy.
What’s it mean?
First, governments have it wrong. This will be evident before too long. Trust me – you’ll not want to be sitting with a heap of debt. Second, folks with cash, money, liquid wealth and negotiable assets will eventually win. Your funds will gain value. Goods will become less costly. Consumer behavior will be modified as FOMO turns into buyer hesitancy – since the longer you wait to get something, the cheaper it may become.
Borrowers squished. Savers saved. Assets sunk. Cash as king. Imagine the impact of that on a government in hock or your neighbours in debt. And you?
About the picture: “I was very moved by your blog post about Canada and your fireworks. I think many of us feel the same,” writes Holly. “It’s such a beautiful, peaceful and clean country. Like all puppies, 5 month old red heeler Little Wing is awed by life. Chasing dragonflies is her most favourite thing, and watching her fascination with nature has been a great way for me to see the beauty all around me. You are right; dogs just make everything better, and Canada is one of the most beautiful countries in the world. My small gift back to her is a bouncy good time on a trampoline loaded with balls. PS… she peed on the balls shortly after this photo was taken.”
152 comments ↓
Mr. Socks wins the October election.
Oh please, please, please… let it be a minority.
Reits seem an unsafe investment if what you are saying is correct, except maybe residential Reits.
#99 Nonplused on 06.13.21 at 8:07 pm
All good points you make.
Transferring the wealth from someone whom earned it via merit (a winner in our game) to someone whom did not earn it and therefore simply won a “birth lottery” (inheritance) undermines the argument for capitalism. (that the best win)
Bill Gates for example has demonstrated characteristics that are admirable and far above the normal, the best won. Not so much with the Irving boys.
IMO Inheritance of fortunes poses two problems:
– The sheer size of the fortunes over $10 Million, as you understand it is not money in the regular sense, instead it is power and influence over society. (I suspect it is structured in such a way that Capital gains upon inheriting are minimal)
– As that French economist Piketty points out, Capital is growing faster that wages, so these fortunes simply invested conservatively will continue to grow and continue to increase the power that the fortune holder has. Permanent Family Dynastic power.
Inheritance of these vast fortunes undermines the positive merit based aspect of Capitalism (that those whom have merit win) and it undermines democracy with the power such fortunes bring. It presents the increasing probability of Dynasty’s wielding power, a plutocracy.
This fellow makes some interesting argument that indeed his fortune is based much more on the long term investments of society than his personal efforts.
https://www.politico.com/magazine/story/2014/06/the-pitchforks-are-coming-for-us-plutocrats-108014/
He is in the top 1% of smarts\ambition but if he was born in Namibia instead of the USA, his merits would mean he own’s three fruit stands instead of being a Multi Billionaire…so he acknowledged it is his environment (laws, education systems technology etc) that has more to do with his wealth that he does.
If you look at Canda wealthiest….looks like 7 of top 10 = “Family money” surrounding by a well constructed big moat. (Influence, power, monopoly, cronyism).
https://en.wikipedia.org/wiki/List_of_Canadians_by_net_worth
I have been to New Brunswick, no one voted for the Irving’s…but they have a lot of power.
The new world you speak of will depend ever more upon machinery which must be fueled by cheap, abundant, and reliable energy sources. Green is not that. Not nearly. Go long on hydrocarbons. Go even longer on nuclear.
Deflation is coming – and with it employment that will shift from the cubicle plantation back to the machine shop and garden. Best to learn a trade and have physical skill set you can trade and barter with.
Imagine that – AI might actually be the second coming after all.
#135 Don Guillermo on 06.14.21 at 1:53 pm
#134 Faron on 06.14.21 at 1:20 pm
Cute.
—
Seems you self-identified there. Guilty conscience? Well done.
I’m a 12 y.o. girl, remember? Cuteness is my stock and trade.
Second, folks with cash, money, liquid wealth and negotiable assets will eventually win.
—————
Cash-money. yeah.
Got lots of it, ready to employ when opportunity calls.
Anyone watching the EURO “2020” Championship?
Tomorrow is Germany vs. France, a must watch for the cognisenti.
Tell me if I’m interpreting what you said correctly.
1) Hyperinflation is not coming. I don’t think anyone is seriously suggesting this. I think most reasonable people think inflation that may result in a prime rate of 5% may eventually be in the cards. Whether you call that hyperinflation or not is kind of semantics. 5% prime rate would be crushing to the Canadian economy and in particular Residential real estate. Could a 5% prime be in the cards or will will see a large spread between prime and fixed?
2) Regardless whether it’s inflation or deflation the best protection is a globally diversified portfolio of index funds.
3) Regardless of whether it’s inflation or deflation, house prices are expected to decline within the next 5 years (I’m extrapolating from what you wrote obviously). Or, at the very least, there is a high risk of this happening.
4) Buying now (in the context that you would have to throw the majority of your net worth to make the 20% down payment) is a very high risk choice – one that has the potential to be a life long financial regret that could have sever impacts on one’s retirement.
– Is that more less correct?
There will be a minor stock market correction, maybe a 10% dip then it will stabilize. Housing will not drop and flatline for a few years with interest rates slightly going up, but nothing significant. Take it too the bank, this is how it will be.
#1 Damifino on 06.14.21 at 1:47 pm
Mr. Socks wins the October election.
Oh please, please, please… let it be a minority.
________
I actually think we’re better with a majority. Right now the NDP is driving the agenda. May not be a big difference, but maybe…
So Garth…
Any thoughts on where taxation goes? How different would that be with a majority vis-a-vis minority.
HST? Carbon?
Do they risk brain drain/flight with 60’s English Musician exodus rates?
Do they gut the middle with higher rates because that’s where the bulk of the revenue comes from?
Do Canadians pull a fast one and sneak an Erin minority in? Would he raise taxes just the same??
Interesting to hear everyone’s thoughts.
IHTCD9
watched the Danish soccer team playing Finland the other day.
Lots of fans with horned helmets.
You would have liked it.
If inflation is such a threat ( and it is) why are central banks waiting so long to raise rates? Are they blind or dumb or what??
Let’s hope, Garth. The inflation scenario is probably the not what anyone wants, inflation’s worst aspect is it allows government to spend on things people wouldn’t have voted for at the cost of whoever has to pay inflated prices without getting any of the extra money. I’m myself not one for predictions but I think the one thing that seems certain is the age of cheap capital is over, there won’t be anyone with anything to lend.
Inflation is really hard to measure. For instance, is our internet bills going up 7% a year inflation or deflation ? It’s far cheaper per gig than it was even 5 years ago. Measured per gig, it’s deflation. Does the CPI even measure puppies ? It’s likely that CPI will drop but goods and assets get more costly.
If what’s coming is deflation, then interest rates will remain low because the BOC is targeting CPI of 2%.
Every time Libs get close to majority territory PM Marvelous puts one of those designer socks in his bilingual pie hole. Or one of his equally incompetent brethern does it for him.
Minority please….and the current polls aren’t kind to His Wokeness, time to spend/gift another 400 billion to shore up “the government will look after me vote”
https://angusreid.org/trudeau-tracker/
Me thinks you are loco.
I hope you’re right and I feel you’re right. It’s hard to keep this savings mindset when everyone around you is having a debt party.
Thanks for addressing the “hyperinflation” non-issue Garth. Good stuff. I liked this passage because I have experience with it: “Get used to the idea. It’s the future. The cloud is a platform of innovation allowing programmers access to computing power that was a dream just a few years ago. As computing costs deflate, so do others. Manufacturing expenses and payrolls fall. Services become targeted and more cost-effective. Robots never sleep or get sick or hungover or need time off or require pensions. Deflation is all around us now, masked by the bits of life that are high-profile, inflationary (and transient) like housing.”
If I want to fire up a website to sell a widget or a doo-dad, I can do it in an afternoon from top to bottom including payment processing, a decent looking web site, and security. And I/you/anyone can do this for very little thanks to Amazon.
I built a web app last week (in the name of science) and had it hosted with its own domain name for free in a matter of minutes. Most of that time was spent learning the minimal software the host requires.
Sure, there is a big chunk of the economy in physical goods and in-person services, but a massive chunk of what remains is now online and will stay there and will grow as AI improves slowly but surely (it’s a one way train).
Anyhow, figured I should post a useful contribution after my earlier drive-by.
The Great Deflation in the late 19th century was triggered by steam, the Suez Canal, the telephone and electricity. Real incomes and the economy grew. Not only that, but it occurred simultaneous with an increase in gold supply, not unlike our current spike in M2.
There’s a pretty clear analogy in 2021 to technology and money supply growth triggering the same thing. Not a good time to hold debt unless it finances something productive that stands to gain from technology-driven efficiencies.
It is difficult to discern because of Covid supply-chain bottlenecks, but it will become evident probably by next year. More of everything, cheaper, quicker and better.
Does that mean that houses drop? Not necessarily, but the point is they won’t rise as fast as assets like Amazon or banks. If (when) rates go up, the alternatives will just be too good to ignore.
“Meanwhile the deflationary influence of technology continues. Every month productivity goes up as more industries automate, reduce operating costs and replace dithering humans with flawless AI. One legacy of Covid and WFH has been to digitize the entire population, proving the economy can function when 25% of all workers stopped going to work.”
What happens when 25% of all workers lose their job because of automation and there’s no safety net like CERB to catch them?
I hope cash is KING then we are set for the charmed life becoming more charming something to look forward to
thanks very much finally.
Vaxing seems to have slowed a bit the past week or so but using 300K doses administered each day on average, 75% of 32M Cdns 15 yrs or older will be vax’d, 2 doses each, by:
Aug 27, 2021*
ALL 32M:
Sep 21, 2021
Also good news, 1st dose to 2nd dose ratio:
5 to 1
down from prior weeks 10 to 1. IMPORTANT since the India variant reduces vax efficacy by:
32%
Just out this morning from the UK, The Lancet.
Corriere della Sera does a good job explaining it all, scroll to the final section about the above:
“The importance of the two doses”
(The Lancet link in there as well – open the link below in an Incognito Window if they ask you to pay subscribe to view & of course, Google Translate to English):
https://www.corriere.it/salute/malattie_infettive/21_giugno_13/covid-variante-delta-indebolisce-l-efficacia-vaccini-fc3def52-cc51-11eb-aaa9-240174c7bd1f.shtml
——————
Labour Day.
Bring it on Canada.
*I know you were hoping for 75% vax’d 2 doses each by AUG 1 Garth but that would take about:
467K
doses administered per day from this day forward. Today was about 267K, a week or so ago the 7-day average was about 325K per day.
Not out of the realm of possibility but I doubt, then again, who knows?
Expect the unexpected during this Pandemic
#21 SunShowers
Another thought:
What happens to businesses when 25% of their customers lose their jobs?
When’s that edit button coming, Garth?
RL lumber futures have dropped below $1,000 to $852 for September contracts. This is an amazing drop from where prices were just a month ago.
What?! You mean housing won’t appreciate by 30%/annum for the next century! Preposterous. sarc OFF
PS. my portfolio thanks you for your service.
#9 Rainman on 06.14.21 at 2:12 pm
There will be a minor stock market correction, maybe a 10% dip then it will stabilize. Housing will not drop and flatline for a few years with interest rates slightly going up, but nothing significant. Take it too the bank, this is how it will be.
—
There will be a minor stock market correction, maybe 10% up then it will stabilize. Housing will not go up and flatline for a few years with interest rates slightly going down, but nothing significant. Take it too the bank, this is how it will be.
This is almost comical:
https://www.burnabynow.com/real-estate-news/opinion-we-cant-compete-with-the-multiple-offer-madness-in-burnaby-real-estate-3870443
It’s got everything:
bank of mom and dad,
“We can’t compete with the ‘multiple offer madness’ as I keep hearing people call it,” he said. “My daughter wanted it so bad and there was so much pressure that she tossed her ‘limit’ out the window.
“She was crushed”
“To be a debt slave or not be a debt slave. That is the question.”
The call of the rising interest rate is frequently heard here – but in real life, it remains elusive and will for some time. There is no denying that the call for a massive recession with millions on CERB, double digit unemployment, hundreds of thousands with mortgage deferrals, and real estate price declines, could not have been any more wrong.
Anyone who took to heart CHMC price predictions of a 16% decline, or the gloom and doom of real estate pundits, has lost a second ‘once in a life time’ chance at financial freedom with 40% equity gains – the first one being failing to jump into the bull real estate market for the last twenty years.
The social divide because those that own and those that rent has never been greater, and never more cemented with a national government that will always backstop the owners.
The average, uniformed Canadians living their life in their own home has had their wealth far surpass the real estate wannabe owners, market following, portfolio investing, high income renters. There is no comparison. So if even the high income Canadian renters have faired poorly against the average Canadians owner, just think how bad the plight of the average renting Canadian is. And the saddest part is that the situation will never change to a point that it will benefit the average Canadian renter.
Prices are always sticky on the way down, taking years and years and years to soften and they will never erase the recent run-up or that would be a crash – which even this site has acknowledged will not happen. So if you missed this year’s run-up, you are out of luck. Just wait for next year is the call of the ‘hopium’ dealers.
Interests rates will rise, but slowly and steadily and will do nothing to soften the market – as by the time most go to renew, their paid down equity will offset rate rises (do the math and see for yourselves). And with the ever so mild rise in rates before Covid, prices remained intact if not increasing.
The unprecedented surge in immigration levels and foreign student placements post-Covid will spike demand in the core cities – which will not only keep prices hot in the urban centers – but will continue to support the migration of the core to the hinterland of cashed up retirees and highly paid WFHers.
And the work from home phenomenon will become institutionalized, benefiting those high paying white collar positions that can now stay in the stix and burbs – keeping those artificially inflated prices high indefinitely. While some companies will call their workers back, the majority will cave and cater to those that already relocated to cheaper places and the need to keep good workers who want the balance.
For those renting and either looking to buy now or in the future, abandon all hope. The ship has sailed and its not coming back! It really is different this time….and a twenty year bull run proves it.
We now return to regular programming after the Re/Max informercial. – Garth
#9 Rainman on 06.14.21 at 2:12 pm
There will be a minor stock market correction, maybe a 10% dip then it will stabilize. Housing will not drop and flatline for a few years with interest rates slightly going up, but nothing significant. Take it too the bank, this is how it will be.
……………………
I agree. I think this is the most likely scenario.
The saver thing will take awhile Garth, many CB rate increases.
But I agree on the “bonkum” vis-à-vis “Liquid, financial portfolios can’t keep up.”
Past 12 months, conservative, set/forget, boring ETFs primarily (90%), my poor man investment portfolio returns to date, and today was a dung day on the Market:
TFSA
+27%
Non-TFSA (the one they tax)
+49%
I’ve read here over the months there are OTHER Commenters with much, much higher returns than the above.
I look for safety in numbers, liquidity, plenty of dividends and the odd living dangerously single stock pick to get my heart pumping in the morning like it used to.
——————-
Too many financially uneducated Cdns out there. And I don’t understand it.
Canada has the most educated lot on Planet Earth. Boggles the mind.
Even if Market returns drop, they will ALWAYS exceed home price appreciation over the long haul.
“First, understand what hyperinflation is – excessive, out-of-control price hikes typically of 50% a month or more. This happens in wars, times of economic depression, rampant political corruption or when a population completely loses faith in the currency, leading to hoarding, shortages and chaos. Money becomes worthless. CBs print even more of it. People stop saving or paying debts. Banks crumble.
Ain’t happening here. Nor will it. Ever.”
We were close… remember all that toilet paper hoarding last year March. Money became worthless, because everybody wanted to hoard Charmin
So what I’m wondering is this. We have one big segment of the population (Boomers) that is currently aging/dying with the youngest Boomers at age 55 (if one uses 1966 as the final birth year) or 56 (if using 1965 as the cut off year). The oldest Boomers are age 75+ depending on their exact date of birth. This group numbers roughly 9 million at this point in time. This group has mostly acquired all the stuff they will ever want or need, so while they may have $ they are not necessarily spending it on stuff. Services however are another story.
Balancing the possible Boomer lag in spending are the younger cohorts – Gen X, Y, Z; Millennials. Whether it is aggregate or ‘just’ the Millennials there are at least 10 million of them. This group is in acquisition mode, be it goods or services. So seems like the possible deflationary effect of Boomers not spending as much would be offset by the younger cohorts spending up a storm. Could this explain why Canada’s posted inflation rates are still trending upwards, at least for now? One big group offsetting the affect of another big group?
#25 Dolce Vita on 06.14.21 at 3:10 pm
Too many financially uneducated Cdns out there. And I don’t understand it.
Canada has the most educated lot on Planet Earth. Boggles the mind.
=============
Rookie mistake to equate education amount with quality a.k.a real applicable knowledge.
I’ve worked with plenty MBA’s and CGA’s who could simply not grasp how the real world was acting completely different to what they learned in school.Most could not adapt and disappeared.
If only the recruiting departments will stop being staffed with junior staff with degrees but 0 world experience or understanding of how the money is actually made, and degrees should be banned for anything else then entry level jobs you would see productivity skyrocket and more people being more humble towards learning from those with real world experience.
Works the same in personal finance ,everyone watches a youtube video,
follows their idol Woods ,Elon and thinks that momentum trading is infallible and crypto is the future, and you cannot go wrong with RE speculation.
#19 Faron on 06.14.21 at 2:38 pm
I built a web app last week (in the name of science) and had it hosted with its own domain name for free in a matter of minutes. Most of that time was spent learning the minimal software the host requires.
=======================================
Was this the utility to download near real time weather data and insert it into PCIC’s database or something new?
#32 Dolce Vita on 06.14.21 at 3:10 pm
Too many financially uneducated Cdns out there. And I don’t understand it.
Canada has the most educated lot on Planet Earth. Boggles the mind.
————————-
Agreed on the financially uneducated, but it’s easy to understand, Canadians are never formally taught about money, or the financial system.
I think Garth has posted stats similar to “30% of Canadians don’t know what a RRSP is for”. Striking.
And I think we generally pat ourselves a bit too much on the back (as Canadians) when it comes to our education and healthcare systems. CAD is good, but not great in both departments.
#30 Rinse and Repeat 2.0 on 06.14.21 at 3:03 pm
We now return to regular programming after the Re/Max informercial. – Garth
Probably, it is time to stop these free Re/Max infomercials and charge the authors for each column inch they consume on this blogpost
Does anyone really know why dogs like balls so much?
What is it about balls that makes dogs lose their minds?
Dan in Nanaimo on 06.14.21 at 2:01 pm
Deflation is coming – and with it employment that will shift from the cubicle plantation back to the machine shop and garden. Best to learn a trade and have physical skill set you can trade and barter with.
Imagine that – AI might actually be the second coming after all.
==================
There was a lot of talk about Artificial Intelligence with self-driving vehicles a while back.
In my view A.I. it will be a long haul (TIC) as we learn that Artificial Intelligence is no match for Natural Stupidity.
Cheers, R
The millenials will figure a way out of this mess.
Time for us boomers to retire, sit back, and watch the new world emerge.
Paper wealth is so hard to unlock, need to sell your whole house to do so and hopefully you kept your hand out of the equity cookie jar. It will only get harder to unlock your paper wealth once rates start rising and the leveraged amateurs will be under water quick. I took the renting advice given here quite sometime ago and just finished unlocking my cottage property (primary res.) wealth at peak lust a few months back…Leasing has felt really good while being completely depth free and watching the markets climb back up. Nice oil & gas bumps today as it climbs back up as well. ENB – got go ahead news today for line 3 US expansion and PPL should finalize IPL merger. Love the divs from these two and its hard to heat cities with turbines, solar panels and batteries…
Bill Gate’s father was one of the top patent lawyers in the U.S. He set it up ironclad, everyone had to pay. Bill was innovative & smart. Full credit. But his dad built the moats around Gate’s empire.
I think deflation in the wind. The barometer is dropping. Stay out too long all the anchoring spots are taken. Stagflation like the 70’s,but different? Too much money getting peeled of for taxes & debt repayment? Small business type capitalists scared to reinvest in capital assets. Extra cash going to safe financial assets. Little investment that creates jobs. Nothing left for the uber & lumpen proletariat. Looks like Garth is telling us that unless you have sure fire long term cash flow covering your payments, get out of debt. Thats your investment decision. Abandon yee all those who rely on capital appreciation to save them from the hangman. Except maybe R/E in the Fraser & Columbia River watersheds.
Interesting developments on the Crypto front.
Most of the “currencies” demanded and paid in ransom ware attacks are Cryptos.
The recent attack on Continental Pipeline shot down a large portion of the pipelines delivering oil to the US Northwest.
Now, FBI confirmed that they have recovered most of the ransom paid.
This, of course, begs the question: Are Crypto transactions as anonymous as claimed?
And as they are being used in criminal cases, will it give the governments justification to shut the Cryptos down, or at at least regulate them?
If I held Cryptos, I would give this some thought.
Deflation will never happen. CBs can always print more. We will get stagflation.
Tell us more about this: “Assets sunk. Cash as king”; specifically, what does this mean for financial assets?
It means cashable assets rule. Illiquid ones sink. – Garth
>Mr. Socks wins the October election
Don’t be so sure. Many commonly liberal voting cohorts have been alienated by rising house prices, and the conservatives are abusing that angle.
I hear what you’re saying about tech deflationary pressures but the money supply chart dwarfs that argument.
#46 Dolly Moderna on 06.14.21 at 4:09 pm
Tell us more about this: “Assets sunk. Cash as king”; specifically, what does this mean for financial assets?
It means cashable assets rule. Illiquid ones sink. – Garth
————
Can’t wait for Nonplussed’s posts.
He’ll say cashable assets such as stocks are not money.
That’s why Bezos is not as rich as he thinks.
#44 Ponzius
Cryptos aren’t claimed to be anonymous. This news story actually does not compute as it is told that the funds were taken off the cloud by the FBI. The fact that the ransom was neither in cold storage, nor demanded in monero(or similar privacy token); either means that they are gaslighting the public or that these are the dumbest ransom-takers ever – which they obviously are not to be able to hack a utility.
Hi Garth, I was wondering if this covid spending would actually hit with stagflation. High demand for goods =inflation, but with wages and jobs not increasing.
Yup, Pizza drivers will soon be out of work, by automated delivery carts, pizza’s will be cheaper.
#1 Damifino on 06.14.21 at 1:47 pm
Nope. Biggest majority since Mulrooney
Rack it
#36 BillyBob on 06.14.21 at 3:29 pm
#19 Faron on 06.14.21 at 2:38 pm
Was this the utility to download near real time weather data and insert it into PCIC’s database or something new?
—
Well, that’s creepy. Note that our servers log all IP addresses and tracing by IP is trivial — even through VPNs. Do not threaten my occupation. Doing so is illegal and I will do everything I can to defend and prosecute.
Yes, I fully expect you to throw up your hands and pretend I’m being rash or that it’s no big deal or not to take things so seriously or some such. But, you seem to be steadily narrowing in on… something and you’ve now crossed a line.
Check yourself. Get on your bike and ride the goose. Think about the asymmetry between attacking someone’s IRL occupation and getting a little razzed as an internet stranger. You’ve razzed me, I razz you. Get some perspective bud.
#44 Ponzius Pilatus on 06.14.21 at 4:00 pm
Yeah. Great thing about crypto is that, although the wallet ownership is private, the transactions are all public. If the pipeline hackers weren’t careful, it would have been fairly easy for the feds to monitor for transactions of similar size, or a pattern of smaller transactions that added up to that size. Then flagging that wallet with the exchanges would have made it easy to trap (greatly simplifying here and out of my league).
Getting the funds out of crypto is a pinchpoint and probably pretty easy to watch over.
We can print 3D buildings, but Toronto real estate is more costly to both own and rent than in Manhattan per income basis.
April inflation rate 3.4%, May comes out in a few days probably close to 4%, by the time June numbers come out the number will be around 4.5 – 5%. We have not seen these numbers since the late 80’s and we know what happened to Toronto real estate, this time we will see at least a 25% drop in values at the min. The next decade will see declining real estate values the opposite of the last 10 years, it will become obvious by August and there will be a rush to list to protect any capital gains as the realization hits that things have changed.
My chart (May data) of the REAL PRICE of HOUSING of Vancouver, Toronto and Calgary Single Family Detached and the Bank of Canada $CAD Commodity Index and 5 Year Fixed Mortgage Rate is up:
http://www.chpc.biz/real-price-of-housing.html
Deflation is occurring in the real price of housing right now and since 1Q 2020 when related to commodities and inflation looks like it is topping right now when related to interest rates.
AI will bite hard. To deal with the swelling ranks of the unemployable, I think a knee jerk reaction of our federal government will be to take us towards a universal basic income. Along the way on said road paved with good intentions we shall see higher taxes, service fees up the wazoo, and much more stringent means testing.
What AI can do.
I read this example several years ago:
They fed in data of 200,000 historical Mammogram scans. They told AI which ones need attention and which ones were all clear.
The AI via Image recognition and an algorithm could scan them based on mimicking the past real results. Programed to assign probabilities of Cancer.
If it was deemed by the AI to be concerning the mammogram was sent off to an Human expert for evaluation.
Result the Human now has to look at less than 10% of the scans. 10 Jobs gone?
As a continual process the end results are fed in and the AI gets better and better. Continuous improvement.
Less human error, less time and less cost.
In other fields have a look at the movie (story) Minority Report and the concept of “pre-crime”, AI with access to your social media , buying habits etc. It will be able to put together a rapid picture of you, as our lives become more and more digital it will be able to gather the data and make uncanny predictions about you and the probabilities of what you may do.
They can already tell a lot about you based on purchases, apparently if you buy sidewalk salt the chance of you declaring bankruptcy over the next decade is next to zero. If you use our Canadian Tire Credit Card at Shark’s poolhall in Montreal apparently it is 100% likely you will be bankrupt in 6 months.
Is our aging demographics going to drag our real estate and stock market down like the Nikkei ?
Japanese style deflation on real estate and everything else…
25 years later …still in the hole ?
https://nationalpost.com/news/with-merkel-leaving-trudeau-positions-himself-as-new-dean-of-g-7
Get ready world….here comes the PM PM (Mr. Justin Trudeau) to save things. Look at the job he has done in Canada, after all.
BB
Welcome to the Left Coast where the crosswalks are rainbows, the politicians are “Woke”, we apologize for everything our ancestors ever did…. and Vancouver City residential parking permits for gas powered vehicles may cost you up to $1000 per car…
https://www.citynews1130.com/2021/06/14/vancouver-parking-permits/
#56 Prabhu Paul on 06.14.21 at 5:02 pm
We can print 3D buildings, but Toronto real estate is more costly to both own and rent than in Manhattan per income basis.
———
That’s because Canada has a severe shortage of both land and raw building materials like wood, didn’t you know?
When the pandemic passes, Ford and his coterie should end up BEHIND BARS
10 years of emergency interest rates. 10 years. And western economies were barely chugging along.
This bump in inflation is just what the doctor ordered.
What a party?! ECONOMIC GROWTH…thanks to inflation.
Can the party last forever? Or will there be a hangover from this one?
#60 Dogman01 on 06.14.21 at 5:10 pm
By definition, AI can’t think “outside the box”. That is a benefit and a bug depending on the application. TBH, it’s the difference between Nations/Locales with cultures of innovation and those with a culture of replication and refinement. The AI will get you refinement in spades, but it will get you exactly zero (useful) invention.
We are also going to have to be satisfied with exchanging the error statistics of a machine with those of a human in which the machine cannot be held “culpable”. In other words, if AI makes a medical mistake, you can’t sue the computer and defining who is accountable is diffuse at best. If a doctor makes the mistake, suing the doctor is a clear path to some kind of restitution (even if such restitution is vengeful and non-productive). I think the human anguish that will be felt when machines fail, even if they do so less frequently, will be hard to overcome. See growing outcry about Tesla autopilot deaths. We will overcome this, but it’s a hurdle. This is what will ultimately keep workers like pilots employed well into the coming decade — no one will want to exchange a culpable pilot for a less-than culpable machine until long after the machine has shown its superior merits.
#43 fishman on 06.14.21 at 3:51 pm
Bill Gate’s father was one of the top patent lawyers in the U.S. He set it up ironclad, everyone had to pay. Bill was innovative & smart. Full credit. But his dad built the moats around Gate’s empire.
I think deflation in the wind. The barometer is dropping. Stay out too long all the anchoring spots are taken. Stagflation like the 70’s,but different? Too much money getting peeled of for taxes & debt repayment? Small business type capitalists scared to reinvest in capital assets. Extra cash going to safe financial assets. Little investment that creates jobs. Nothing left for the uber & lumpen proletariat. Looks like Garth is telling us that unless you have sure fire long term cash flow covering your payments, get out of debt. Thats your investment decision. Abandon yee all those who rely on capital appreciation to save them from the hangman. Except maybe R/E in the Fraser & Columbia River watersheds.
———————————————–
The end game of financial capitalism is Feudalism
A FIREBALL FROM HELL!
As time moves on, it will come to pass that a great number of speculators (gamblers) will be remembered as having gone “BARKING MAD”. BARK, BARK, BARKING on and on, day and night as to how this time the financial landscape has flattened out. There are no curves, valley’s, mountains or rivers to cross, nothing but blue sky , Big Sky Montana as far as the eye can see. For 12 years on the trot, these over confident gamblers have been increasing their debt and leverage to maximize their bets, because, BARK, BARK, the bigger the bet the bigger the payoff. Never mind that leverage unwinds faster than it builds. The thought of the next fireball of deleveraging/margin calls never crosses their minds. I suspect the incessant barking will soon be replaced with whimpering sounds and tears the size of “Horse Ba**s” running down their rosy red cheeks. You can call me a dreamer, but I’m not the only one.
Grath said :
“First, governments have it wrong. This will be evident before too long”
They have been doing the same thing for over 10 years and now it’s getting even more crazy and you believe that in a near future they will wake up one morning and say let’s jack up interest rate and stop this nonsense ?
That poor dogawful mutt looks so baffled, surrounded by little plastic objects each with an IQ 5X her own.
So technology will temper inflation without any impact on future employment. Dream on.
We can only guess how Canada will fare as the world adjusts to life after Covid. All we do know is that Canada has little room left to address any future crisis.
Optimistic chatter will do little to assure that the future quality of life of ALL Canadian citizens improves.
#63 crowdedelevatorfartz
and we cancel Canada Day.
@63 crowded
Vancouver City fiddles with parking fees and regulations while the opioid crisis burns. Disconnection reigns.
DELETED
#50 Brian on 06.14.21 at 4:43 pm
#44 Ponzius
Cryptos aren’t claimed to be anonymous. This news story actually does not compute as it is told that the funds were taken off the cloud by the FBI. The fact that the ransom was neither in cold storage, nor demanded in monero(or similar privacy token); either means that they are gaslighting the public or that these are the dumbest ransom-takers ever – which they obviously are not to be able to hack a utility.
—————-
You may be right.
But the seed of doubt has been seeded.
And we probably will see much tighter controls by governments in the future.
That was my point.
Happy Pride Season!
https://www.canada.ca/en/department-national-defence/maple-leaf/defence/2021/05/launch-of-pride-season-send-your-video.html
#60 Dogman01
In other fields have a look at the movie (story) Minority Report and the concept of “pre-crime”, AI with access to your social media , buying habits etc. It will be able to put together a rapid picture of you, as our lives become more and more digital it will be able to gather the data and make uncanny predictions about you and the probabilities of what you may do.
————-
I don’t need AI to figure out what blog dogs will be posting here.
Take CEF for instance, the minute I see his handle I know he either will bash Trudeau, the Liberals, rainbow crossings or Vancouver.
And Austrians posting on this blog.
@#65 BoJo the Clown
“When the pandemic passes, Ford and his coterie should end up BEHIND BARS”
+++
And Preem Kathleen Wynn gets a free pass?
With her advisor Butz?
You remember the Universal basic Income experiments in those northern Ontario towns that quietly died a well deserved death during her reign of error….
They bled Ontario waist deep in red ink and then Butz moved on to bigger and better.
Careful what you wish for.
“Dolce Vita on 06.14.21 at 3:10 pm
Past 12 months, conservative, set/forget, boring ETFs primarily (90%), my poor man investment portfolio returns to date, and today was a dung day on the Market:
TFSA
+27%
Non-TFSA (the one they tax)
+49%”
Can you substantiate your claim on these returns by sharing which etfs?
@#74 Keith
“Vancouver City fiddles with parking fees and regulations while the opioid crisis burns. Disconnection reigns.”
+++
Yep.
We are averaging 200 Over Dose deaths of young people every 1.5 MONTHS in BC.
For at least the last 5 years…and its getting worse.
Barely a peep about that because the politicians dont know how (or want) to deal with it.
Jail?
Compulsory Detox?
More free needles?
No new ideas.
215 anonymous kids that died 100 years ago…..are much easier to deal with.
My perspective of Canada’s future is null and void! Big problems down the road, inflation/deflation it will effect the RE overall. People are in so much debt it is mind blowing! Though not my problem. The whole country is in big trouble… get used to it, you blew it up to where it is now, low interest rates…. time to pay up! Don’t blame the savers, we did what it right for us. T2 will serve you with high taxes, so get used to it for the rest of your life.
#77 FriedEggs
First was pride day, then week, then month and now this “season” from the DND no less? Wow.
#81 crowdedelevatorfartz on 06.14.21 at 6:48 pm
@#74 Keith
“Vancouver City fiddles with parking fees and regulations while the opioid crisis burns. Disconnection reigns.”
+++
Barely a peep about that because the politicians dont know how (or want) to deal with it.
—
If it has any basis in truth, Sam Cooper’s book will tell you exactly why it’s not being dealt with. His thesis, in short:
–Overdoses nowadays are in majority due to fentanyl.
–Fentanyl comes from China (or at least the precursors)
–BC has cosied up to the Chinese Gov’t
–BC refuses to deal with the drug-related money laundering going on in the Casinos to the tune of billions annually.
–There are accusations that BC and federal politicians directly benefit from this activity
–BC certainly indirectly benefits through massive casino revenues upwards of 2 billion annually.
Thus, the dying will be allowed to be run over with some token dollars thrown at the problem to “help” all-the-while the known drivers of the opiod crisis gets totally ignored save for some token efforts to make lefties like me happy. All this because BC is partly beholden to Chinese gov’t interests. It’s a bit of a reach and I take Sam’s book with a lot of skepticism, but if it’s true. Man… Explains the unresolved Huawei standoff among many other issues.
However, the 215 are connected in that first nations people continue to be viewed as disposable by politicians on the left and right. This makes it easy to tolerate their vastly disproportionate representation among the opiate deaths and directly descends from the views that saw 215 kids buried anonymously and apparently without documentation in Kamloops.
“Deflation is all around us now, masked by the bits of life that are high-profile, inflationary (and transient) like housing.”
No deflation in the real economy.
Try buying metals, machinery, primary materials and labour.
Inflation is here. Hyperinflation is not.
The CPI is a convenient bogus measurement to justify artificially low rates, dictated to the BOC by their political masters.
Higher and higher taxes will keep inflation high. When it costs you $3,000, $4,000, $5,000 a month to rent a house, apartment, condo it does not matter if all those other technological items costs less. Deflation is said to be in Japan for many years but it costs so much to live there.
Deflation was first said it would happen in 2002-2003 by Greenspan former US Federal Reserve Chairman but it never materialized. Life and the cost of living will always be more and more expensive. Get used to it.
#67 Faron on 06.14.21 at 5:32 pm
Someone said to me think of “Smart Cow Problems”, AI is not the Smart Cow, but once the Smart Cow finds the week spot in the fence all the other cows can replicate\duplicate going to the greener pasture. So once Humans figure out the answer we can get the AI to recognize the occurrence of that problem and use that answer. In my experience we often knew that if A than B, determining it was A was occurring was the challenge and then realizing we already had solved the problem with answer B rather than trying to figure it all out again.
I think they are having Court Transcripts done with a little AI, send the voice recordings and the AI system transcribes it all and gets better and better as it deals with more instance so of accents. The magic seems to be that it can improve based on more data.
I suspect AI’s strength will be its ability to always be on, non-stop active monitoring and then alerting on valid patterns it is instructed to alert on. (with some method of self-improvement hopefully fully monitored by Humans vs the “busy child”)
I am reminded of and old song:
https://genius.com/Judas-priest-electric-eye-lyrics
“You think you’ve private lives, think nothing of the kind
There is no true escape, I’m watching all the time”
@#76 Ponzie’s Planted egg
“But the seed of doubt has been seeded.”
+++
Ummm.
FYI.
On planet Earth.
We dont seed seeds.
We plant them.
But I knew what you meant.
#81 fartz
BINGO and that’s about as sad a truth right now
#63 fartz
BINGO and that’s another home run
But wouldn’t noticeable deflation trigger a recession?
Canada is in the top 5 for “automation readiness” – way above U.S. , U.K. and Australia – according to this research from The Economist.
https://www.automationreadiness.eiu.com/
It would be nice if we made industrial robots too, instead of just using them.
https://www.marketresearchreports.com/blog/2019/05/08/world%E2%80%99s-top-10-industrial-robot-manufacturers
#87 Dogman01 on 06.14.21 at 7:24 pm
I agree with this, but I think it’s easy to overlook how hard this actually is — how smart the “smart cow” must be. In many applications, it’s possible to train an algo on a dataset and have that algo work well in a statistically significant portion of the cases but, because the input dataset can not capture the full complexity of the “problem”, the algo inevitably fails because it runs into edge cases or it runs into cases of hysteresis where there is a bifurcation in response to a given set of inputs.
Tesla’s efforts at full self driving are an example of how challenging this is. They are relying on a fairly limited set of data and expecting it to work in open-world conditions where the dimensionality of the problem are staggering. Tesla’s system works well a good chunk of the time. Often enough that people will happily film tick tock videos of themselves napping behind the wheel with autopilot on. How they film themselves “napping” is beyond me. But, unfortunately, the technology is failing to be correct enough and is causing accidents.
To repeat, the “smart cow” is very often a lot smarter than it may appear at first and gathering a full enough data set for the AI to negotiate all twists and turns is a tough effort. But, it does improve with time…
#80 Jackinthebox on 06.14.21 at 6:40 pm
“Dolce Vita on 06.14.21 at 3:10 pm
Past 12 months, conservative, set/forget, boring ETFs primarily (90%), my poor man investment portfolio returns to date, and today was a dung day on the Market:
TFSA
+27%
Non-TFSA (the one they tax)
+49%”
Can you substantiate your claim on these returns by sharing which etfs?
******************
It’s not that wild of a claim, basically, everything is up 30% y/y
iShares S&P/TSX 60 Index ETF
30.41 CAD
+7.10 (30.46%)past year
S&P 500
4,255.15
+1,188.56 (38.76%)past year
At this attrition rate, there may soon be nobody left to use street opioids. Do the injection sites test for fentanyl?
“Trust me – you’ll not want to be sitting with a heap of debt.”
___________________________________________
There you go again …. needing to be reeled in.
Please explain to your faithful steerage section that you are speaking of a certain type of debt, and that not all debt is bad. Debt that can be easily paid off in full at any time, or that can be paid off over the current term of the loan (should interest rates rise significantly) is not a bad thing … and can in fact, be beneficial!
You seem to be painting all debt with the same brush.
@#84 Faron
“Overdoses nowadays are in majority due to fentanyl.
–Fentanyl comes from China (or at least the precursors)”
+++
No argument here.
Check out
The One Hundred Year Marathon
by Michael Pillsbury.
He’s served with Presidential administrations from Nixon to Obama.
Fluent in Chinese.
Spent many years in China (spying?)
A research Fellow at Harvard, the US Defense Dept, C.I.A, Senate Committees, on and on and on.
His book was written in 2015 and his warnings about China’s resentment towards 150 years of Western subjugation is just as pertinent today.
Fentanyl is payback for the Opium wars of the mid 18th century.
The Communist Chinese Leadership have long memories and patience.
Hence the 100 year marathon when dealing with Selfie Politicians like our current Master and Commander.
Count on the Fentanyl crisis getting worse, much, much worse
#2 Lee on 06.14.21 at 1:48 pm
Reits seem an unsafe investment if what you are saying is correct, except maybe residential Reits.
________________________________________
Ho-Lee. I don’t even know where to begin … so I won’t waste my time. You probably wouldn’t listen anyway … But no, no and no.
I agree, deflation and a flat lining economy. People think that their jobs will not be affected. I found out that wife can cut hair which is 90% of what the barber does. There goes my $25 per month.
Look at this dude operating a robotic jackhammer. https://content.cdntwrk.com/files/aHViPTcwOTYwJmNtZD1pdGVtZWRpdG9yaW1hZ2UmZmlsZW5hbWU9aXRlbWVkaXRvcmltYWdlXzVjNDVkNTgwMTlmZDEucG5nJnZlcnNpb249MDAwMCZzaWc9Yzc0M2M2OTUyYjQyZThkYmVlMGQ0NTlhOTliMzI4NDQ%253D
#71 Felix on 06.14.21 at 5:41 pm
That poor dogawful mutt looks so baffled, surrounded by little plastic objects each with an IQ 5X her own.
******
She looks happy though, not like a sourpuss.
#82 rowdie on 06.14.21 at 7:01 pm
Do you know how the extremely indebted people will be servicing their debt? Through inflation and of course wage increase.
What the govt has done right now is taking some growth from the future and using it today because of the pandemic. Nobody, I repeat, nobody wants to see a lot of families failing servicing their debt. So the inflation will kick in, the real value of the houses will go down a bit even if the nominal value will stay the same, the wages will grow and the ones who were extremely indebted will become just indebted.
I can say with a certainty that depending on how the equities market behaves (what if it goes up more than the houses in toronto in the next few years, so it could cover the growth and the taxes to be paid from it?), but nobody in Ottawa wants to see real estate equity erased, because in their minds “real estate is owned by the ordinary Canadians, and only the rich can maximize their RRSPs and TFSAs”.
Nobody knows nutn’.
Dang Chinese.
Even win at American Dogshows.
Pekingese wins Best of Show.
#97 crowdedelevatorfartz on 06.14.21 at 8:07 pm
I’ll check that book out. But, for now, I need something a bit more spiritually uplifting. Sam’s book didn’t leave much room for hope.
Sail Away: I think some injection sites offer testing and that is one of their reasons for existence.
I agree with you Garth that deflation – not inflation – is coming once the supply/demand distortions of the pandemic work themselves out.
And if we are facing deflation, this country is in serious trouble. The government is banking on inflation to inflate away their debt. Deflation will be an absolute disaster given the mountains of debt we have, as we can’t pay it back. Inflate away or die.
I don’t think that hyperinflation will be a problem, but I do think we’re going to see stagflation as inflation continues to rise and CBs will be under pressure to keep interest rates low because of the astronomical amount of debt governments have racked up.
Eventually CBs will have to raise interest rates, and that will raise bonds, and I think we’re in for an era of pain like the 70s and 80s. Your advice last year to lock in your interest rates as long as possible I think will turn out to be the best advice of the decade.
#104 Faron on 06.14.21 at 8:28 pm
Sail Away: I think some injection sites offer testing and that is one of their reasons for existence.
———
Thanks
@#103 Pekingese Puppy
“Dang Chinese.
Even win at American Dogshows.
Pekingese wins Best of Show.”
+++
I’m certain that champagne corks popped at Communist Party Central in Beijing at that “coup”….
Unfortunately those dogs still remind me of “Cousin It” on the Adams Family
Now if only they could erase the “Westernization” of the breed ‘Pekingese” and revert it back to “Beijingese”
The Bank of Canada is responsible for INFLATION which DESCIMATES savings while enriching the dog owners, pimps, banksters and crooked politicians in Canada:
Pierre Poilievre explains inflation tax in Canada [while Adam Von is laughing someone where at his gains in the real estate bubble]:
https://youtu.be/7DnnKazoACU
Check out this Chinese cartoon featuring the G7 leaders and the hanger-oners.
Two faced Kangaroo and a Beaver with a bad stutter…
M46BC
https://www.heraldsun.com.au/news/world/chinese-cartoon-mocks-g7-leaders-and-doublefaced-australia/news-story/af254c604c65a7650e7ae5a6bd0c5c76
#108 crowdedelevatorfartz on 06.14.21 at 9:02 pm
Now if only they could erase the “Westernization” of the breed ‘Pekingese” and revert it back to “Beijingese”
———
‘Pekinese’ is the Cantonese pronunciation.
@#110 Flop
Classic.
I thought their propaganda division was a bit better than that.
Oh well.
Their hackers are world class.
Inflation. How exactly is it measured anyways? In fact the CPI (US version) has been adjusted more times than you can count over the last 40 years, with significant changes in the early 80s, 90s, and turn-of-the-century.
Hedonic adjustments, substitutions, and removal of actual house prices are the biggies. Hedonics – the price for the model of car you purchased 2 years ago is up 10%, but because it now has a passenger side airbag standard per the BLS the price is actually lower.
Shadowstats tracks what CPI would look like under the 80s and 90s versions to compare apples-to-apples.
If calculated per the 90s version, the US CPI over the last month would be ~9% (instead of 5%). If calculated the way it was done in the 80s, it would be 13%.
http://www.shadowstats.com/alternate_data/inflation-charts
#49 Ponzius Pilatus on 06.14.21 at 4:28 pm
#46 Dolly Moderna on 06.14.21 at 4:09 pm
Tell us more about this: “Assets sunk. Cash as king”; specifically, what does this mean for financial assets?
It means cashable assets rule. Illiquid ones sink. – Garth
————
Can’t wait for Nonplussed’s posts.
He’ll say cashable assets such as stocks are not money.
That’s why Bezos is not as rich as he thinks.
—————————-
Correct. Sort of. Assuming Bezos could sell all his stock without cratering the price he is very rich. And if he does that he’ll face one mother of a tax bill. But a liquid asset still isn’t cash until you sell. Just ask anyone who held Nortel or BreX shares.
Wealth taxes are problematic because wealth isn’t money. Wealth generates money, and by and large that money is taxed.
Ok, why isn’t Bezos paying more taxes on the money he generates from Amazon? Well, mostly because he keeps plowing it back into to expansion, web services, streaming, etc. Amazon has never paid a dividend. But if they ever do, all the Amazon millionaires and billionaires will be paying taxes, as they will whenever they sell shares.
We should also remember that when we talk about Bezos we are also talking about you if you own Amazon. Whatever they come up with to squeeze Bezos is going to squeeze us all. You can’t just tax certain people.
CEF
Fentanyl is payback for the Opium wars of the mid 18th century.
The Communist Chinese Leadership have long memories and patience.
—————-
Pretty strong statement.
During the Opium wars, there was an Emporer, not Communists.
And it mostly involved the Brits and not many other Western Nations.
I’ve talked to my in-laws and other relatives in China and they hate the Japanese more, because of the atrocities committed by the Japanese during the 20th century.
Google: Nanking
#77 FriedEggs on 06.14.21 at 6:31 pm
Happy Pride Season!
https://www.canada.ca/en/department-national-defence/maple-leaf/defence/2021/05/launch-of-pride-season-send-your-video.html
******************
The “B” in LGBT leads me to believe there are only 2 genders.
#54 Faron on 06.14.21 at 4:53 pm
Get help…
The bond market is already talking deflation.
But how are the savers going to be saved? I don’t see debt becoming expensive anytime soon, if ever. And by expensive I mean over 5% mortgages.
GSD
#54 Faron on 06.14.21 at 4:53 pm
#36 BillyBob on 06.14.21 at 3:29 pm
#19 Faron on 06.14.21 at 2:38 pm
Was this the utility to download near real time weather data and insert it into PCIC’s database or something new?
—
Well, that’s creepy. Note that our servers log all IP addresses and tracing by IP is trivial — even through VPNs. Do not threaten my occupation. Doing so is illegal and I will do everything I can to defend and prosecute.
Yes, I fully expect you to throw up your hands and pretend I’m being rash or that it’s no big deal or not to take things so seriously or some such. But, you seem to be steadily narrowing in on… something and you’ve now crossed a line.
Check yourself. Get on your bike and ride the goose. Think about the asymmetry between attacking someone’s IRL occupation and getting a little razzed as an internet stranger. You’ve razzed me, I razz you. Get some perspective bud.
=========================================
It’s good you at least recognize you’re being rash. I asked a question, a simple yes or no would have sufficed. You mentioned you wrote and submitted an app last week but Github has nothing in June so I was curious if it was the same one. Or do you have the market cornered on coding in addition to leftist moralizing?
And this is somehow threatening to your entire profession…? Ok then. IP tracing? Fill yer boots. I guess you’ll file a report with the Internet Police of…uhh…what again? Web browsing? Gsus.
Methinks it’s not me who has to get over thyself.
Oh my, it looks like the market just got 10 times hotter! These massive price increases are sure to continue with billions being thrown at a tight market and bidding over ask! Good luck to the average Canadian buying – you will always lose the next bidding war with these players!
https://www.theglobeandmail.com/business/article-condo-developer-to-buy-1-billion-worth-of-single-family-houses-in/
#111 Sail Away on 06.14.21 at 9:26 pm
#108 crowdedelevatorfartz on 06.14.21 at 9:02 pm
Now if only they could erase the “Westernization” of the breed ‘Pekingese” and revert it back to “Beijingese”
———
‘Pekinese’ is the Cantonese pronunciation.
————
Funny guys,
Here’s an anecdote just for you.
The Pekingese were the Emperial dogs.
Just like the Queen’s “Gorkys”.
No one else was allowed to breed or own them.
When the Brits invaded the Royal Palance, they killed all the dogs, except for two, that were the smartest ones and did hide. Fortunately they were a pair and went on to produce many offsprings and kept the breed alive.
I told the Chinese guy who told me the story: That’s impossible, the Brits love dogs, but he insisted it was tru.
Well I have to admit that I had a few too many Tsingtao beers.
And is was loud in the bar, and in Chinese (Mandarin and Cantonese) similar words have different meanings.
Rinse and Repeat
For those renting and either looking to buy now or in the future, abandon all hope. The ship has sailed and its not coming back! It really is different this time….and a twenty year bull run proves it.
“We now return to regular programming after the Re/Max informercial. – Garth”
He could be right, as we now compete with Corey and Faron @ Core Development Group, probably one of many. It just gets more Depressing for housing in this Country
https://stevesaretsky.com/a-bidding-war-with-blackrock/
What they dont and won’t tell you…
Future of US & impact on India:
Canada has printed 65% of all cad dollars in the last one year and made most of it available to big banks & corporations. This will lead to weakening of cad dollar.
Obviously, having assets in cad dollars doesn’t make sense if it’s just going to weaken.
To ensure that they are not left holding the bag, big banks and investment funds are buying real estate; even at much higher prices.
Any temporary losses will be recovered in the long term by increasing house rents all across the nation.
Price of lumber and steel have also been increased so that people can’t construct their own homes as easily.
In short, they have played the long game and common people are at their mercy.
This is what they meant when they said, ‘You will own nothing and you’ll be happy’.
You’ll be happy because they’ll tax the fck out of you and devise UBI (Universal Basic Income).
Dependent upon them for housing and food, and addicted to the entertainment funded by them, most people will be the modern equivalent of feudal peasants.
This will lead to a very slow but long recession, essentially a genocide of sorts where cost of living will slowly increase and people won’t be able to afford having children.
The rise in degeneracy will add fuel to fire and keep this madness going like substance abuse does to its victims
So Tim Uppal recants himself on niqabs but doesn’t see the hipocracy on RCMP and military turbans?
Enough of the diversionary tactics, when in Canada, do as Canadians…
Agree that hyper-inflation will.never.happen.here.
Ditto for deflation.
A world awash in debt has no choice but to print its way out of the problem, and to tax the heck out of those that have something of value to be taxed.
Sure, housing will likely be targeted, but how is it that those who have no financial assets and loads of debt will pay more taxes??
Therefore, I revised Garth’s sentence:
“Second, folks with cash, money, liquid wealth and negotiable assets will eventually win the right to pay for their country’s debts. Your funds will gain value and be taxed accordingly.”
I’ve seen it already starting with Mountain Bikes. There was a huge demand and no supply for the longest time. This caused a spike in prices. Now you see some of the supply coming in and prices stabilizing and even going down.
#111 Sail Away on 06.14.21 at 9:26 pm
#108 crowdedelevatorfartz on 06.14.21 at 9:02 pm
Now if only they could erase the “Westernization” of the breed ‘Pekingese” and revert it back to “Beijingese”
———
‘Pekinese’ is the Cantonese pronunciation.
———
You are so wrong. A quick internet search shows that Peikin is the romanized version. The cantonese pronounciation is Bak Ging.
Why do you even bother to pretend you know Cantonese?
Garth,
I don’ think there will be post World War 2 hyperinflation or 1930’s deflation. The CB’s have printed too much money for deflation to try to DELAY a 1930’s Depression. That was the whole point of policy decisions since 2008 to avoid a deflationary depression. You seem to think they have averted it. I just think they’ve create long term structural problems to the global economy. We are looking at more of a modified 1970’s stagflation with a baseline cost of living exorbitantly higher than the 70’s. I agree on your AI and robot thesis. That can’t be stressed enough and I don’t think people fully understand the implications. One of which is U.B.I. at some point once the working class low level/skill jobs are eliminated all together.
Who said anything about a depression? – Garth
@#115 Ponzies Pharmaceutical Pals
“Pretty strong statement.”
+++
The communist regime in power could all but crush the production and distribution of fentanyl.
It’s increased exponentially.
Japan may be hated for what it did in China before and during WWII but.
The US and its allies are the threat….
Not an aging, depopulating country, non nuclear country that hasn’t been allowed to have an effective military in 80 years.
119 Billybob
re PhD Guy
I guess they were all out of the anti paranoia pills at the local pharmacy last week.
No biggie.
I have it on good authority …. from my contacts in the NDP.
There’s another shipment arriving in Victoria this week.
He’ll be back to normal in a day or two.
Oh our ruling elites. How’s that economy coming along.
See how these actors (Govermental Actors) roar with laughter – at us.
https://twitter.com/katewand/status/1404098497289330691?s=19
G7 summit in a nutshell (thread): World elite class show up in private jets, while having destroyed their own countries aviation industries for regular workers and travellers
—-The Purges in Kanada continue? How many high ups and elected reps and military brass are gone, now?
Holiday travel was one excuse back in January.
https://ottawacitizen.com/news/national/defence-watch/lt-gen-mike-rouleau-steps-aside-after-controversial-golf-game-with-vance
Lt.-Gen. Mike Rouleau steps aside after controversial golf game with Vance
..
..
But why… sweeping new powers. Not going away. Papers please. Ye CV did that
“New Garda powers to allow access to mobile phones, changes to ‘stop and search’ (irishtimes.com)
Refusal to provide phone or computer password set to become criminal offence
Garda sources said the pandemic had accelerated the commission of large numbers of crimes, including minor offences such as low-value drugs transactions, on messaging apps as in-person contact became restricted”
Oooh, new tactic. Localized house arrest in Australia. Yes it’s been said there and Kanada are the test zones for new tactics. Shrug.
With Ontariowe’s “State of emergency” set till December, and all local CV bylaws set till Sept, Dec in most areas…it will be a fun flu season here no?
.Melbourne apartment complex locked down following discovery of two new coronavirus cases(sbs.com.au)
—
— This New System is brutal – with no signs of going away in Kanada. UBI anyone or is that in the plan for 2022-24? Things are not yet bad enough. Slo Mo Crash.
.Canadian business leaders demand plan to reopen borders, economy now (ctvnews.ca)
— Not much better elsewhere. The state of science, testing healthy people.
.Chile: Fresh curfews despite vaccination program success(dw.com)
.Chile shuts capital Santiago once more as vaccines fail to quell rampant cases (reuters.com)
#119 BillyBob on 06.14.21 at 10:44 pm
So, you attempt to acquit yourself by admitting you are also poking around our github? Do you have the faintest clue how git works? What is wrong with you?
You need to get some perspective here bud. For those who see it, you are fading into a dark place and hard. I’m not talking about my entire profession here, I’m talking about my job that you know nothing about although you seem to be desperately trying to learn…
#129 crowdedelevatorfartz on 06.15.21 at 8:38 am
Why the h-e-l-l are you defending this guy? I always saw you as an affable and upstanding fellow. Don’t prove me wrong.
Don’t forget kids, AI is just code written by people (with all their inherent biases)
Could someone please explain to me the Bank of Canada bond buying? I keep reading BoC is buying most (3B weekly, down from 5B) and not much supply is available to private investors.
Doesn’t this mean interest on these purchases is locked in for a long time as well? Doesn’t this make BoC your friendly neighbourhood Loan-Shark? Actually, BoC is turning a Loan-Shark into a Loan-CareBear here, right?
What is the other side of this coin of buying up all this debt and holding it at low yield? Is it just supply of money/credit flow thus devaluation of CAD?
How long can this house of debt be propped up?
What am I missing?
Would this push the debt reckoning out a decade at this point?
133 Faron on 06.15.21 at 10:23 am
#129 crowdedelevatorfartz on 06.15.21 at 8:38 am
Why the h-e-l-l are you defending this guy? I always saw you as an affable and upstanding fellow. Don’t prove me wrong.
——————————
Obviously, CEF has a man crush on this guy.
Put a uniform on a man, and suddenly he becomes an authority on everything.
A woman I can understand, but a manly man like CEF?
126 Not important
You wasted a google search on that?
Take all SA’s comments with a grain of salt and look for a little sarcasm. You’ll live longer.
If you’ve followed the blog you’ll know the Cantonese v. Mandarin discussion from a little while back.
And being a blog, it’s just……not important.
@#136 Ponzies Platonic Pals
“Obviously, CEF has a man crush on this guy.”
+++
Nah,
I’m attracted to Austrian yodelers.
I thought it was obvious.
#135 Q on 06.15.21 at 10:50 am
“Could someone please explain to me the Bank of Canada bond buying? I keep reading BoC is buying most (3B weekly, down from 5B) and not much supply is available to private investors”
There is “ask” and “bid”
The private investors are not bidding high on the price of bonds.
Only CB’s are willing to pay the high asking prices and keeping the yields low.
It’s a sham.
invisible hand of the market?
Pentagon awards $30 million in rare earths funding … – Reuters
https://www.reuters.com › article › us-usa-rareearths-id…
Feb. 1, 2021
aussie’s new partnership?
Congress Close to Reversing Trump-Era Lending Loophole
rent- a -bank
By partnering with what are called rent-a-banks in the industry, the non-bank lenders can enable triple-digit interest rates on loans. The actual lenders funnel the money and the profits through a rent-a-bank, which puts its name on the document. But critics note that it’s still the non-bank company that is really making the loan, which a court might find illegal if challenged by the borrower.
https://www.dcreport.org/2021/05/23/congress-close-to-reversing-trump-era-lending-loophole/
===============
How Congress and You Subsidize the Richest Americans
David Cay JohnstonBy David Cay JohnstonJune 14, 20216 Mins Read
https://www.dcreport.org/2021/06/14/how-congress-and-you-subsidize-the-richest-americans/
Boston’s State Street Bank Defrauded Its Customers for 17 Years—and That’s Just One of Its Crimes
Department of Justice
U.S. Attorney’s Office
District of Massachusetts
FOR IMMEDIATE RELEASE
Thursday, May 13, 2021
criminal information charging the company with one count of conspiracy to commit wire fraud. Pursuant to the agreement, State Street agreed to pay a criminal penalty of $115 million. State Street also agreed to continue to cooperate with the U.S. Attorney’s Office in any ongoing investigations and prosecutions relating to the conduct, to enhance its compliance program, and to retain an independent corporate compliance monitor for a period of two years.
The ability of a corporation to obtain multiple leniency agreements makes a mockery of DPAs and NPAs. These arrangements are justified as a way to encourage a wayward company to change it practices, yet the ability to obtain multiple get-out-of-jail-free agreements does nothing more than incentivize more misconduct
As shown in Violation Tracker, it has paid more than $1 billion in penalties in previous cases dating over a decade.
https://violationtracker.goodjobsfirst.org/parent/state-street-corp
Hidden markups seem to be a recurring theme for State Street.
deferred prosecution agreement in connection with a
I think deflation is more likely as well.
Could we see inflation of supplies/consumables/taxes and deflation of assets, or is that what deflation in general, is?
#134 Yuus bin Haad on 06.15.21 at 10:41 am
Don’t forget kids, AI is just code written by people (with all their inherent biases)
Xxxxxx
…and input data. Reminds me of swearing parrots.
POOR RENTERS. Condo developer plans to buy $1-billion worth of single-family houses in Canada for rentals. Looks like buy now or never . LOL
@#133 Faron
“I always saw you as an affable and upstanding fellow.”
+++
As a PhD ….This will cheer you up.
https://www.youtube.com/watch?v=XABXzOrhBXI
@Billy Bob
I have contacted your acquaintance SD and my director to inform them of your mucking about in case it evolves further. There is now a defensive stance against any further garbage you attempt. I reiterate that this is defensive, not offensive. I’m going to do my part and leave this here. I strongly suggest you do your part and also leave this aside. If you take exception, please contact me through email addresses you now clearly have, anonymously if you prefer.
I sincerely don’t think you mean real harm, but I’m not going to take any more chances here. You have crossed several lines now. I certainly have had a part in provoking you, but as any reasonable person should realize, anonymous, mutual, virtual provocation should never equate to real-life threats of any kind. I’ll be monitoring this.
Welp, this morning’s been fixed-income time. It’s tough to rebalance when equities make so much $ so fast. As The Notorious B.I.G. says: ‘Mo money, mo problems’.
Bought the following:
-Rate-reset preferreds. This is the sixth such purchase since 2019 and pref future remains bright.
-Bonds: Decent 3.54% rate on US Series I
#141 Brett in Calgary on 06.15.21 at 11:36 am
I think deflation is more likely as well.
Could we see inflation of supplies/consumables/taxes and deflation of assets, or is that what deflation in general, is?
**********
After scouring all the opinions of experts and reasonable analysis…my eyebrow raised when Garth mentioned deflation….again as he did a while ago.
I don’t think the price of gasoline is going back down…nor most necessities. As for the non essentials, people will stop buying due to lack of credit or cash or simply priced out.
Where I live gasoline is higher than it ever was…but demand for fuel is not as high as it was…not yet at least.
What is the opposite of a 20 year bull run on credit?
#144 crowdedelevatorfartz on 06.15.21 at 12:21 pm
As a PhD ….This will cheer you up.
https://www.youtube.com/watch?v=XABXzOrhBXI
Hah, that is funny. For a sec I thought you were comparing me to Kevin Spacey tho :-(.
Anyhow, I don’t need cheering. I’m just… concerned.
It’s a transitional phase we all live in right now. Borders are fading, the concept of work changing, to eventually cumulate in almost no work done by humans at all. Industry will be 90%+ automated, humans will possibly even meld with machines themselves. The future actually looks very good, but for us in the here and now – we get to deal with the transition from thousands of years worth of back breaking labour and a system built upon it – to a totally different existence. We live in an amazing time in human evolution – unfortunately, it sucks.
If you’ve got Disney+, check out “Year Million”, a 6 part series covering what I consider as a pretty good bet at where we are headed. Change is only going to accelerate from here, you can take that to the bank.
Who said anything about a depression? – Garth
Actually, you’ve said many times in the past ten years that The Federal Reserve response since 2008 was to avoid a very obvious deflationary depression similar or worst than the 1930’s from happening. That we agreed on. That is still the case today.
Where we differ is you think we will be able to normalize rates and abandon QE the past 13 years and I’ve disagreed and been proven correct.
Until QE is removed permanently and interest rates can normalize, and by normalize even above 3.0% consistently on The Fed rate without the economy/stock market crashing, this is simply delaying an inevitable crash not preventing one.
So yes, deflationary pressures has ALWAYS been the problem since 2008 but we are arriving at different conclusions presently and for the future. Each shock since 2008 has required more trillions than the previous shock. And yes the Repo Market was already collapsing prior to Covid 2020 so this spending wasn’t just Covid.
And when banks close all those branches. where will all those middle class workers with great big mortgages get decent paying replacement jobs?
As programmers? Not likely.
First, they know nothing about today’s programming languages nor the tools needed, never mind how to actually code. And secondly, even if they did, they’d not be worthwhile programmers for many years to come.
There is a major learning curve before one becomes a productive programmer.
So, unemployed in the prime of their lives from decent paying jobs, with lots of debt and big fat monster mortgages. Let the sales begin.
Unemployment causes people to sell assets like houses, investments and personal goods. That’s because today’s unemployment insurance does not pay the bills of the middleclass homeowner. Instead, they immediately start losing major league money and start liquidating assets to cover their living expenses.
And lets talk about all the malls that have lost 30-60% of their retailers. Been in a mall lately? Large numbers of stores closed during the pandemic. There’s a huge amount of retail space sitting empty and nobody with any sense is running out to lease it.
So.. lots of middleclass unemployment.
But wait, there’s more!!
Think of all those the closed bank branches, the closed businesses, all those empty mall stores, all the feeder businesses, all those workers, now unemployed. All of which were once employed, made profits and paid TAXES, which paid for those unemployment benefits.
All of which will no longer be happening.
Houses, investments and assets will have to be sold and taxes will rise. Losses that the banks thought they had “dodged” during Covid will have simply been “delayed” by all that government free money.
Unemployment is not just a “break”, it’s a compound fracture. You lose the taxes paid by the employed, the government has to pay them unemployment benefits, and they have less taxes from which to do so.
Instead of borrowing cheep money, the unemployed have collection agencies calling. Anyone who lent them money demands it back or charges them higher interest rates because they are now a risk.
And to make up for the added costs and lost profits during Covid our businesses are charging more because they think they can get away with it.
So, everyone runs to buy untaxed used goods.
Open loop feedback has a nasty whiplash.
The housing market and digital currencies are bubbles and Ponzi scheme created by greed and criminals. One is a worthless digital file created by criminals to launder their money. While the other is the major tool used to launder that money, which the digital currency helped move around the world before turning it back into cash.
This is new stuff. Those who profess to know all about it, actually know squat. However, they did con a lot of others into believing because they told them that they could profit from it. And some did.
However, the future is about to show them how wrong they really were.