Huff & puff

Overheard on the elevator somewhere around the 50th floor as two financial advisors for a major bank cradled their four-dollar Bay Street Starbucks.

“So he traded up his G-wagon.”

“Seriously? I thought Tom just got that thing.”

“Yeah, six months ago, the AMG package. Paid two-twenty.”

“So why sell and take the hit?”

“No hit. He got two-eighty for it. Off Kijiji, if you can believe it. The guy’s got horseshoes coming out his butt…”

“I heard the used car market was nuts. But that’s just fierce…”

It’s true. And while most people flip Civics and not souped-up, off-road Mercedes, anyone selling a used car lately knows all about inflation. Prices have swollen like a dead guppy in the sun. Cost-of living increases have taken the central bankers by surprise. What they thought was a temporary blip last year has come to bite everyone this year. And cars (like houses and golden retriever pups) show it perfectly…

  So the news is out. The official inflation rate is 5.1%. On the street, far higher. Used cars escalating, a 28% year/year jump in real estate, premium gas in Toronto at $1.90, a sickly head of romaine for $3.79, insurance premiums, utility costs and taxes swelling – everything is on the rise. Meanwhile, people buying homes at crazy prices have the mother of all shocks coming as market value assessment bloats their property tax bill.

Meanwhile, what’s your bank ‘high-interest’ savings account paying? Hmmm. Canada’s largest one, RBC, says “earn high interest on every dollar” with its HISA eSavings Account. It currently yields 0.050%. There are GICs around yielding upwards of 3%, but funds have to be locked away for years, you’ll pay tax on interest not received, have zero liquidity, and still be losing more than 2% annually.

It’s been over 30 years since inflation in Canada was this torrid. Forty years in the US, where it’s running hot at 7.5%. This means an entire cohort of people – the biggest group in society now, the Millennials – have never in their adult lives had to deal with it. These folks have grown up in an environment of 2% mortgages, negligible cost-of-living increases and technological advance which has rendered devices more powerful for the same or less money every year. Little inflation has also meant sluggish income growth, while cheap money encouraged massive debt accumulation and lured half of all new borrowers into variable-rate mortgages. Gulp.

The Mills has lived through an average inflation rate of just 1.8% for the last thirty years. That was well within the Bank of Canada’s target of 1-3% in place since the 1990s. But for almost a year now, things have gone sideways. At first the CB scoffed at escalating prices, kept its rate low and blamed the hikes on pandemic shortages and a wonky supply chain. But they persisted. They augmented. They spread. And now the bankers are way behind the curve, trying to corral a problem that’s gaining strength. Once people believe prices will keep rising, they change behaviours – borrowing more to buy assets at current prices, demanding higher incomes, and feeding the beast.

This is why it’s a slam-dunk interest rates will increase the week after next in Canada, and in the following days Stateside. Financial markets are currently pricing in as many as seven (7) increases in the next twelve months. In other words, if you have a HELOC now on your property at prime plus a half, the cost of that could jump from 2.95% to 4.7% by Christmas or next Spring. Interest-only payments on $300,000 would rise from $740 a month to $1,175.

As for mortgages, increasing yields on five-year Government of Canada bonds have already been reflected in the cost of fixed-interest home loans. There’s more to come. But at least people who locked in have a few years to adjust. Their amortizations will be untouched until that awful day when they renew at twice the rate. The VRM crowd faces a different dilemma.

The cost of a variable-rate mortgage is, well, variable. (Who knew?) With every one of the seven anticipated ticks higher in the BoC rate, these loans follow. Most borrowers will not face higher monthly costs, but their debt repayment will fall fast. Come renewal, they’ll be in a relatively worse situation as it becomes obvious opting for the cheapest rate was a costly mistake.

Now you know why this blog has been yammering away for a year about locking-in debt. Those 2% long-term home loans ain’t coming back soon, or ever. Sorry, kiddos. Mortgage inflation could cause real estate deflation. That’s good news – unless you just bought.

As for people with cash, tough choices. Opt for bank savings products with a guaranteed real loss (after inflation) or you can invest in a prudent portfolio that will hopefully yield two or three or five points above the annual COL increase. But there’s always risk. Markets are high. We haven’t had a correction for a while. And if you lack a solid long-term focus, or do something stupid (like buying a meme stock) heartache could ensue.

Adulting is hard. Welcome.

About the picture: “I’ve included a picture of Dexter to share on your blog, sitting like the distinguished gentleman he truly was,” writes Brendan. “Never one to pass an opportunity for a nap in the warm sun, he was a sweet and gentle character. It marks a year since we had to say goodbye to him, far too early in his young life.  My heart breaks about how much he is missed, but I think back and cherish the precious time we were fortunate enough to shared with him. With any pet, they become family and we are exceptionally lucky to have had him in our lives.”

202 comments ↓

#1 jess on 02.16.22 at 1:09 pm

education:
Department of Justice , and the SEC fincen finra On Oct. 6, 2021, Deputy Attorney General Lisa Monaco announced the creation of a National Cryptocurrency Enforcement Team (NCET), a group comprised of federal prosecutors from the Money Laundering Asset Recovery Section (MLARS), the Computer Crime and Intellectual Property Section (CCIPS), and other Assistant U.S. Attorneys detailed from U.S. Attorneys’ offices around the country. NCET is poised to “investigate, support, and pursue cases against cryptocurrency exchanges, infrastructure providers, and other entities that are enabling the misuse of cryptocurrency and related products to commit or facilitate criminal activity.”
https://www.sec.gov/news/press-release/2022-26
In settling the case, BlockFi didn’t admit to the regulators’ allegations. It will halt U.S. sales of the product and introduce a new one that complies with securities laws.
uesday, February 8, 2022
Two Arrested for Alleged Conspiracy to Launder $4.5 Billion in Stolen Cryptocurrency
Government Seized $3.6 Billion in Stolen Cryptocurrency Directly Linked to 2016 Hack of Virtual Currency Exchange
View Deputy Attorney General Monaco’s Remarks here. https://www.justice.gov/opa/pr/two-arrested-alleged-conspiracy-launder-45-billion-stolen-cryptocurrency

…..while some get educated by this podcaster?
https://pressprogress.ca/pierre-poilivere-went-on-a-podcast-hosted-by-a-guy-who-compares-central-banking-to-slavery-and-nazi-germany/

#2 Felix on 02.16.22 at 1:20 pm

Today’s picture says it all.

Don’t mess with us.

#3 Sean on 02.16.22 at 1:26 pm

Good call on IRs, Garth.

Real interest rates are likely to remain very negative (close to -10%) in foreseeable future.

I’m not entertaining the idea but one has to wonder – why not get a loan and buy RE? If you make money, great, if not, so many other voters would be impacted and government would have to step in to help. It sounds crazy, but it’s not impossible. The next big rescue will be for the people – MMT-style handouts.

#4 Søren Angst on 02.16.22 at 1:30 pm

Wryly? StatCan Consumer Price Index, January 2022 writes:

“In January 2022, the CPI rose 5.1% on a year-over-year basis. Wage data from the Labour Force Survey found wages rose 2.4% during the same period, meaning that, on average, prices rose faster than wages and Canadians experienced a decline in purchasing power.”

No Sh!t Sherlock.

AND

My Liege, some things cannot be unseen…to wit:

“Prices have swollen like a dead guppy in the sun.”
[That was good]

And of course the ever ubiquitous:

“And if you lack a solid long-term focus, or do something stupid (like buying a meme sock)…”

Meme socks can easily be purchased in Italia 9,95€:

https://www.amazon.it/AlterSocks-Calzini-donna-regalo-pazzesco/dp/B078819RCW/ref=asc_df_B078819RCW/?tag=googshopit-21&linkCode=df0&hvadid=366815102790&hvpos=&hvnetw=g&hvrand=236651772637867310&hvpone=&hvptwo=&hvqmt=&hvdev=c&hvdvcmdl=&hvlocint=&hvlocphy=1008660&hvtargid=pla-702178705395&psc=1

———————-

Let the bullets fly My Liege…

#5 Stlbstl on 02.16.22 at 1:33 pm

Didn’t we just have a correction?

#6 Overheardyou on 02.16.22 at 1:43 pm

If the payments for VRMs don’t change even if rates rise then there’s no immediate impact on the borrowers. Does this not mean they have nothing to fear so long as they make the same payments?

#7 Søren Angst on 02.16.22 at 1:46 pm

‘Ta heck with the Mills.

Us Paleo’s went thru high inflation in the late 70s well into the 80’s + jobless recovery of near 4 years after the recession of ’80-82.

SYMPATHY for the Mills for me lies somewhere between Sh!t and Syphilis in the Dictionary (the paper one).

And yes I just got my tax you must pay notice and get virtually no OAS along with that payment, today notice.

Yours truly,

– Have a nice day from CRA whose long arm reaches out all the way out to Italia.

Children born out of wedlock comes to mind…

#8 don't poke the bear on 02.16.22 at 1:55 pm

“Cost-of living increases have taken the central bankers by surprise.”
________________________________

it’s not a surprise at all Garth. it’s on purpose. just like in the 60’s and 70’s, central banks kept rates lower than inflation, until Volker came along..

just like after WW2.. when they instituted yield curve control, with inflation spiking to 19% in Feb 1947 and US rates were 0.86%

this is done on purpose.

you said last year to watch how lumber priced spiked then collapsed, well, guess what, they’re back at all time highs…

crude oil just shy of $100/bbl

natural gas is about to go vertical.. $4.63 today, you watch this year will be $12-15, ,maybe even more.

this is a direct result of central bank policies.
it’s criminal, imo. but no point in complaining about it.

various agricultural commodities have been spiking. soybeans, soybean oil, palm oil, cotton, coffee, oats…

the price of industrial metals through the roof..

all done on purpose, by central banks. when you print trillions of dollars in a year, feed it to the economy, .. this is the end result.

#9 XEQT and chill on 02.16.22 at 2:04 pm

RIP people who Smith Maneuvered.

#10 Blobby on 02.16.22 at 2:07 pm

Recent history bias has shown me NOT to expect the Canadian bank to do ANYTHING until the Feds increase first.

I 100% expect the Feds to raise their rates, but I cant see Canada doing it 2 days before them.. They’ll wait until next time around.

I dont mind being wrong though. Just what i’ve noticed of late.

#11 Mr. Socks on 02.16.22 at 2:14 pm

A meme sock? You mean like Justine’s?

#12 Blobby on 02.16.22 at 2:15 pm

If Canada DOES go first, i cant see them going full .5%, it’ll be .25. Wait for the US to do .5% first.

#13 Ryan on 02.16.22 at 2:18 pm

40 married with a kid and a dog and rent. We spoke to a financial advisor and in no way can we buy AND retire. Pick 1 we were told. Kids do not study Engineering or Medicine, WASTE OF TIME AND MONEY; you’ll pay off your loans and start saving only to find out there are more stress-free opportunities out there that will get you financial freedom far earlier in life. Maybe not a house, but def debt free by 30 and that is options! Balanced and Diversified will save us and allow us to retire, but we’ll never own and we don’t even live in T.O. or Vancouver.

#14 Dave on 02.16.22 at 2:22 pm

BOC had their chance to increase rate BUT decided not to.

Its not going to be any different…some stupid reason will be sited.

Central banks have lost all Credibility and yet nothing changes. They have too much power and ZERO accountability.

#15 Prince Polo on 02.16.22 at 2:25 pm

Well good thing this lil’ (Millennial) piggy built his rented pad out of portfolio accumulation. Huff & puff all day long, you big bad wolf…

#16 VRooM! VRooM! on 02.16.22 at 2:28 pm

Garth, VRMs ard not bad news for everyone. Specifically those that have already had them for awhile and who have the means to pay them down if necessary.

Remember, the increases happen over a multi-year period, so you would need to take that into account. In reality, i might still be breaking even at the end of 2023, not to mention all the benefits I have already received from having low rate for a few years.

If at some point i need to pay this off, i can pay down 15% of the amount borrowed, NOT the balance outstanding , every year. That’s HUGE. Additionally, you can still increase your monthly payments… Up to 2X. Before you know it, you are done. And if the plan to increase rates does not happen for some reason, you still may be paying less than a fixed rate. VRM gives me this flexibility.

#17 Shawn on 02.16.22 at 2:31 pm

Lower Inflation Ahead?

If premium gasoline has hit $1.90 it’s quite likely to be the same or probably lower next year.

Will we then hear cheers for the low inflation next year?

And if gasoline will be higher, fine, just move to Alberta to participate in the boom. Here’s a nice selection of brand new houses at good prices:

147 homes at prices from $260k to $675k. There is just one home above $675k a show home at $1.5 million. But that one is in Kelowna, the vast majority here are in Alberta and as said the maximum price show is $675k. Brand new single family home with it’s own dirt.

https://www.melcorcommunities.com/property-status/quick-possession/?current_page=15&sortBy=priceHighToLow

#18 Dr V on 02.16.22 at 2:34 pm

I would miss Dexter too :(

#19 G on 02.16.22 at 2:35 pm

Hi #137 TurnerNation,

My bank only lets you get 5k a day out, so off to get a bit more cash out today, small bills. Keeping minimum in cash account to avoid fees.
So when PMT doesn’t like what I “think” I’ll have a bit of cash on hand to still buy some food, or give food to a friend for a bit longer anyway.

Have you seen this today Pierre Poilievre YouTube 2min

BREAKING: inflation balloons further to 5.1%
https://www.youtube.com/watch?v=siW8RpcLDlw

You might find todays video interesting too, from www x22report . com will let you know what platforms you can find it still. Financial view-opinion
Ep 2703a – Sometimes The People Must See It To Believe It, Economic Tyranny

#20 X on 02.16.22 at 2:38 pm

The Bank is behind on fighting inflation. On one hand, if they really wanted to fight it, they would have moved already, so a .25 increase is likely. On the other hand they have admitted they are behind on this curve and the more they increase early, the less that will be required in the long run.

#21 Realist on 02.16.22 at 2:39 pm

At the rate shelter costs are skyrocketing, going to jail would be a better option: Free shelter and you might get a chance to shag the prison guard like you hear on the news.
Try working 40 hours a week to pay rent to a slumlord and having bad luck on Tinder.

#22 IHCTD9 on 02.16.22 at 2:42 pm

Nice kitty, and an apt name for a natural serial killer.

#23 T2 or bust on 02.16.22 at 2:45 pm

Well at least we know now that modern monetary theory doesn’t work.

Printing all that cash and giving it away, during a time when there were restrictions on supply of goods and services, DID NOT result in everyone being able to have whatever they wanted, at low low prices.

#24 ElGatoNerodeYVR on 02.16.22 at 2:46 pm

82 DON on 02.15.22 at 6:02 pm
********
Is the assumption that everyone had a fixed term mortgage?
≈=======
If they didn’t have a fixed or convertible ( which a lot of variable rate are ,you can .ock in any time at a set rate obviously higherthan the discounted rate) or fail to lock in thye deserve whatever is coming their way.
Assumption was that most people will lock in as soon as the rates start climbing significantly.
The biggest danger I see is the wages not keeping up meaningfully with real inflation as housing will reset to inflation eventually.
If one looks at China for example where people are just as obsessed with RE as we are and prices to income is even worse than in Canada the only way prices came down was when the govt. provided guidelines to resale condo prices and cracking down on developers. South China Morning Post as a source.
I don’t see that being possible in a free economy like ours.

#25 mike from mtl on 02.16.22 at 2:47 pm

Agreed it’s all a slam-dunk rates are going up, question is how much and will it be effective?

Higher borrowing costs are kryptonite to RE, but everything else mentioned how is that going to rein in price inflation? Transport is costly, fuel is costly, labour is short, Covid insanity means goods out of big China have huge lead times and so on.

BoC I guess will attain the bullets they lost from 2018.

#26 AM in MN on 02.16.22 at 2:48 pm

The pain has only started. This is going to take a decade to unwind.

Those who look down on the truckers, who think freedom is overrated and prosperity comes from a Government cheque fed by printed money from the CB, will wake up one morning wondering what happened to the country that used to value the things the truckers represent.

As I’ve said before, the big picture here is a future much like the medieval past, where a few live off the rent and the serfs work two jobs to pay the taxes and the interest, like a hampster on a wheel until you die.

There is only one way out, and that is the ancient and time tested formula of freedom, private property rights, the rule of law (not the rule of lawyer!), responsible government (the level of govt. that does the spending does the taxing), sound money and strong families.

I have no expectation that more than 30% of Canadians will vote that way, and thus, tyranny here we come.

#27 IHCTD9 on 02.16.22 at 2:55 pm

Canada is like a car careening down a mountain road, out of control with a crazed drunk at the wheel. Death could happen at any moment. In fact, it’s imminent. We just don’t know what the trigger will be, and how big of a fireball.

#28 Ayn Rand #2 on 02.16.22 at 2:58 pm

This is insane. We are recently retired with great pensions and interesting small contract jobs to make life bearable between traveling. We are seriously thinking of cashing out by selling and NOT rebuying anytime soon – we did plan on moving out west eventually.

We have the time to downsize, declutter and primp. And perfectly happy to rent a condo, lock up and travel. And if its too rainy in Victoria, head to the East coast.

Anyone else in with me?

#29 GravyC on 02.16.22 at 3:03 pm

Hi Garth,

Does yield curve flattening change anything the BoC will do match 2nd?

#30 Adam on 02.16.22 at 3:03 pm

“Adulting is hard”.

Yep, you said it. I have my entire portfolio in cash right now. I am paralyzed by the reality of having to make a “decision”. And maybe this is why so many millennials choose to dump everything they own into a house? To them, it just makes sense and it’s an easy investment that seems stable. Stocks are scary. Investments are scary. There’s no easy solution. I could invest in broad based ETF’s but they could drop 20% in a month. I could also go middle-of-the-road and invest in some corporate bonds or something, but it still carries risk. Everything has risk. I don’t want to get “shopify’d”. My end goal is to put my money into a “B&D” portfolio but I am afraid this is the top of the market. I know you are never supposed to time the market, but I can’t help it. So here I am, paralyzed with fear, with 600k sitting in cash. What the hell do I do.

Invest it. Forget about it. Your time horizon is long and you will seriously regret not investing now in a decade’s time. – Garth

#31 Adulting on 02.16.22 at 3:05 pm

When the 10 year treasury passes 2.5% and holds, interest rates will have started a 40 year downtrend reversal.

Bonds will go down.

Stocks will suffer as so many have become drunk on cheap credit and can’t pay higher interest rates.

Gold will outperform and so far this year already has.

That’s funny. – Garth

#32 Barb on 02.16.22 at 3:08 pm

Thanks Garth for finally posting a pic of Felix.
Couldn’t resist that one!

Brenda, yes they quickly become family. Condolences.

#33 Reality Check on 02.16.22 at 3:08 pm

I am a fiscal/economic conservative without a political home now. The federal conservatives having thrown in with the lawless antivax protesters, no longer represent me.

I think the conservatives are scared sh**less of the nutbar right far right/social-conservative movement. But by adopting policies that appease the far right they are alienating the good old middle of the road conservatives – people that want fiscal responsibility, low taxation, and small government. Us middle of the road conservatives generally support social responsibilities like following the law, respecting the rights and freedoms of others and getting vaxed. The middle of the road conservatives I know don’t give a rats a** about your sexual preferences, where immigrants are coming from, and tinfoil hat conspiracies about Bill Gates or nefarious government plots.

Don’t know what I’ll do next election. Can’t support any of the mainstream parties so maybe, for the first time in my life, I don’t cast a ballot.

#34 Stone on 02.16.22 at 3:10 pm

It’s been over 30 years since inflation in Canada was this torrid. Forty years in the US, where it’s running hot at 7.5%. This means an entire cohort of people – the biggest group in society now, the Millennials – have never in their adult lives had to deal with it.

———

Ohhh goodie!

That means they’re ripe for the picking.

#35 Rook on 02.16.22 at 3:14 pm

MMT says the government could pay off its debt TODAY, if it wanted to, just by printing money, since it owns the printer. The deficit is basically an arbitrary, meaningless number, according to MMT.

If that’s true, wouldn’t that mean the target inflation is equally arbitrary? Why can’t the BoC change their target inflation rate from 1-3% to 5-7%, and their problem goes away?

MMT would render our dollar semi-worthless, as we are a trading nation with a small population dependent upon the world. The loonie would crash, interest rates would soar and cabbages would be $18. – Garth

#36 willworkforpickles on 02.16.22 at 3:15 pm

Yes, those with cash…what should they do?

If anyone has read any of my comments lately, you may recall the reasons i have given why inflation is only going to keep rising.
Without going half way through the makings of a book with 50 chapters in it again here, long story short…smallish Fed interest rate increases planned for 2022 won’t get near ahead of the inflation curve and will only add more fuel to the inflation fire later in the year.

So…from the very perspective inflation will soon be roaring, and it will as i have maintained…enter the Fed.

The Fed has the masses wrapped around their baby fingers and will play a flimsy interest rate increase game this year via paltry increments. Not near enough to ever get ahead of the inflation curve, but in fact, fuel it higher.
What it is enough of and does serve as, is in keeping the masses at bay while they pretend to be doing something about inflation when all they’re doing for the rest of this year anyway, is keeping the masses gullibly subdued.

The Fed has no idea what they’re going to do next year when the inflation kitty turned roaring lion is finally out of the bag. They’ll think of some more bullsh-t then, but are happy with themselves for now their smoke and mirrors show will get them through yet another year.

So…getting back to the start of this post without going into writing another book on inflation, and what to do with cash if you have it.

Traditionally speaking – Gold at times can and has served as an inflation hedge, but its time to shine again hasn’t arrived yet.
Reits and commodities like oil can as well.

The problem with these being consistent inflation hedges through time has been, when inflation rose up but had a short lived span of inflation longevity, they got an eventual failing grade .
Now that real inflation longevity is all but assured as it was in the 70’s or had become that way, we are going into a time of an inflationary span unprecedented in history.
So all three of those inflation hedges will shine again.
As for gold, buy the ultra cheap explorers proving up millions of new ounces each year who are well funded.
Just don’t do it today. Wait.
When the Fed starts with its rates snow-job of 2022, gold and those explorers will pull back some.
Once the Fed becomes glaringly exposed to the masses their too little too late smokescreen to get inflation under control has failed..??? Just wait for later in the year until the market reaction to it plays out and then its game on.
The time will come then to back up the truck and cash will be king once again for yet another short moment in time.

#37 Stone on 02.16.22 at 3:23 pm

#26 AM in MN on 02.16.22 at 2:48 pm
The pain has only started. This is going to take a decade to unwind.

Those who look down on the truckers, who think freedom is overrated and prosperity comes from a Government cheque fed by printed money from the CB, will wake up one morning wondering what happened to the country that used to value the things the truckers represent.

———

What those occupation terrorists represent is anarchy. Oh, and their own personal interests.

If everyone valued what these anarchists value, we’d live in a country full of anarchy and tyrants running the country.

Think about that instead of dreaming your silly little fantasy.

#38 MD on 02.16.22 at 3:25 pm

MMT does not allow asset price to fall. Let’s see how things turn out when so much talk and prep work is going just to increase rates by 0.25%. Fed is trapped with 9 trillion balance sheet and we all know what happened in 2018 when they started unwinding.

#39 Faron on 02.16.22 at 3:27 pm

#26 AM in MN on 02.16.22 at 2:48 pm

… thus, tyranny

Strange you should use the same word that Tucker Carlson used to describe Canada.
Anyhow, the tyrants around here need to up their games, for I haven’t felt their wrath in… ever.

Only interaction with tyrants was at a check-stop in which I was told that I can’t ride home from the beer store with the beer within arms reach. Not that I would ever find pleasure in a road pop.

#40 Welcome back cotter pin on 02.16.22 at 3:28 pm

#6 Overheardyou on 02.16.22 at 1:43 pm

If the payments for VRMs don’t change even if rates rise then there’s no immediate impact on the borrowers. Does this not mean they have nothing to fear so long as they make the same payments?

——

Yes, that is true but that assumes that your interest portion doesn’t exceed your total payment amount. Otherwise, expect a call from [email protected] to rectify.

Also, when your term is up, the interest payment portion will reflect the new reality and you will need to pay the piper.

#41 All lies and manipulated on 02.16.22 at 3:30 pm

Now that’s a cool cat!
As I stated eons ago cash is trash. Boy is it ever.
Partly the result of “when the budget and monetary theory doesn’t matter”
Good one Garth. Thx

#42 don't poke the bear on 02.16.22 at 3:32 pm

#30 Adam on 02.16.22 at 3:03 pm
__________________________________________

huge mistake sitting on cash. even if you make a paltry 6-7% over the long term, you’ll still double your money in a decade.

sitting in cash with inflation at 5%+ in canada is a far bigger disaster.

#43 When the Whip Comes Down on 02.16.22 at 3:33 pm

In BC property tax bills don’t work on assessed value that way. Any material change in taxes occurs based on where your assessed value lands versus your neighborhood.

Keep telling yourself that. I know, it helps. – Garth

#44 Shawn on 02.16.22 at 3:33 pm

PH.Ds in “money printing”

Since the vast majority of money is digital and not physical bills, does the very use of the term printed money perhaps suggest that those who think it is so damaging maybe don’t really have a great understanding of money, money supply, and how it increases?

I have attempted to understand same and wrote the following about it:

https://www.investorsfriend.com/government-and-central-bank-money-printing/

I ran my article by an actual PH.D economist and he did not disagree. Maybe he was just being polite.

My point is not that that central bank balance sheet expansion and bond purchases are no problem but rather that the whole thing is very complex and pointing fingers largely at central banks may not be right. Central banks do not force commercial banks to lend at low rates. They did that of their own volition driven by competition and their desires for market share and due to the protection of CMHC which is not the central bank.

#45 Reality Check on 02.16.22 at 3:33 pm

Take Note all you government conspiracies theorists

Of course we all know there is a group of people out there (some of them even amongst us!!) who actually believe the pandemic was whipped up by the Illuminati/lizard people/new world order peeps/etc, etc to ultimately control and enslave all of us little guys.

So behold, in our Nations Capital and borders in Ontario, Manitoba, and Alberta a semi organized group of antivaxxers has defeated all levels of governments’ attempt to control them. And looking at these people I suspect they have never protested anything before ever, too busy hunting, fishing and drinking beer.

The antivax protesters have made utter fools of elected officials. Have outwitted police and put Canada on the world antivaxxer map. They have cost to country billions in economic activity, tens of millions in policing costs and cast into doubt Canada’s position as a secure trading partner. And the people that have done this are not professional politicians, do not have high priced strategists, and do not have the support of the vast majority of Canadians.

The antivax protesters have made the Prime Minster look like an ineffective fool – his best responses has been “we are having meetings” and asking the opposition to end it. The Ottawa mayor and police chief repeatedly admitted they were helpless against the antivaxxers. While the liberals finally invoked the emergency measure act, it is being viewed as being toothless – the protesters believe the most likely outcome will be a deal that they leave and no charges/fines are levied (as in today’s Manitoba deal).

So these are the politicians that the tinhat crowd thinks are going to control and enslave all of humanity. The ability for large government organization to conspiratorially and secretly control a population is nil, absolutely nil. Enslaving a population is like hurding cats on espresso. Seriously you people need to get a hobby of some type.

#46 Nick on 02.16.22 at 3:40 pm

.
People and government are addicted to low rates more than a drugy addicted to meth.

So, rates won’t go up more than 1% in next 2 years, atleast in Canada.

You will also get a pony in the mail, Nick. – Garth

#47 Linda on 02.16.22 at 3:49 pm

‘Dexter’ also looks like he is trying to preserve his modesty:)

There was a blog post last year that mentioned the price adjustment that occurs when goods or services increase ‘temporarily’. The post cited that when things normalized that the price increase would adjust downward, but not to its former level. How would that translate regarding inflation? The price is still greater than before but has dropped from its peak. Is that still considered inflation?

#48 Paul on 02.16.22 at 3:51 pm

DELETED

#49 willworkforpickles on 02.16.22 at 4:02 pm

#27 IHCTD9

“Canada is like a car careening down a mountain road, out of control with a crazed drunk at the wheel. Death could happen at any moment. In fact, it’s imminent. We just don’t know what the trigger will be, and how big of a fireball.”
…………………………………………………………………………………………………….

That’s a bit like the way i used to describe it only with a train instead – barrelling full speed down a mountain slope after its conductor’s had a stroke, violently rocking from side to side with it brakes blown off, then passing a bridge out up ahead sign and hitting a barricade across the tracks sending it ass over end off the side.

That last bits a bit ad-libbed…but what the hell…its time for a shot of scotch anyway.

#50 Faron on 02.16.22 at 4:09 pm

Looking forward to the gold medal hockey match-up tonight. Will anyone else be watching?

#51 Sail Away on 02.16.22 at 4:13 pm

Shawn,

I crawled around your site a while. Very nice.

You should probably update with the newest job you seem to have undertaken as ‘Alberta Booster Club President’

#52 All lies and manipulated on 02.16.22 at 4:13 pm

#36 willworkforpickles on 02.16.22 at 3:15 pm
=======================
I’m on your page there. Thx

#53 James on 02.16.22 at 4:18 pm

#49 willworkforpickles on 02.16.22 at 4:02 pm

#27 IHCTD9

“Canada is like a car careening down a mountain road, out of control with a crazed drunk at the wheel. Death could happen at any moment. In fact, it’s imminent. We just don’t know what the trigger will be, and how big of a fireball.”
…………………………………………………………………………………………………….

That’s a bit like the way i used to describe it only with a train instead – barrelling full speed down a mountain slope after its conductor’s had a stroke, violently rocking from side to side with it brakes blown off, then passing a bridge out up ahead sign and hitting a barricade across the tracks sending it ass over end off the side.

That last bits a bit ad-libbed…but what the hell…its time for a shot of scotch anyway.
__________________________________________
So what your saying is don’t buy a car, a new car or a used car just buy an old train. Got it.
PS I’m keeping my old used car its going to be like gold!
Oh crap I used the G word, sorry Garth.

#54 fishman on 02.16.22 at 4:20 pm

Reality Check, if you come on this blog you have to vote. 40% of Canadians didn’t vote & lil potato won with less than 20% of eligible voters. What do you think? Life is a choice between good & bad. Federally, I have sometimes gone Dipper because thats the only chance in this riding to get rid of the rotten potato. If you don’t vote how can your comments on here mean anything? Man up,grit your teeth & drag the least ugly one home. Try putting a 40 pounder of Vodka in the freezer to dull the pain for afterwards.

#55 I don’t know on 02.16.22 at 4:20 pm

Sean on 02.16.22 at 1:26 pm

Correct. Interest rates are rising, but they will remain low for a long long time. So far, the correct thing to do (and continue to do) was borrow to purchase real estate, which is an asset everyone wants. Preferably with dirt, and in a large city.

Condos and other strata may see some slight price drops.

Basically, interest rates are low for a number of reasons. Many people simplify the whole system by making it as though central banks have total control. They have a lot of sway, but aren’t omnipotent. They can’t overcome things like aging demographics, or change the nature of our modern economy/financial system which runs on borrowing.

Regarding Millennials, they are no definitely not stranger to inflation. They have witnessed house prices go higher and higher for decades already. Worrying about the expectation of higher prices getting entrenched was something that was therefore only relevant decades ago. The lucky/ambitious ones realized this and purchased real estate when they could. The lucky/ambitious ones who haven’t purchased will find a way. Ditto for financial assets and portfolios. Millennials will be fine. Talk to any mils and you’ll notice interest in stocks and bonds has never been higher. Ignore the Wall Street bet crowd, im talking balanced portfolios.

This doesn’t mean we aren’t in a housing affordability crisis. We are, and rising rates are about to make affordability worse. Much worse. House prices in Canada (and worldwide) are high for a lot of reasons beyond just low rates. Demographics, population levels, building costs, increasing urbanization, smaller family units, cultural preference for hard assets, and so on are all factors that will keep house prices rising indefinitely.

Buy when you can afford to is good advice. Invest as soon as possible in a portfolio, and ignore the doom sayers. They are wrong, and always will be. Hiding in quickly depreciating cash will always be a financial folly.

IDK

#56 Freezing in the Prairies on 02.16.22 at 4:23 pm

So sorry about Dexter- bet he was a fantastic character and always made you smile.

#57 neo on 02.16.22 at 4:29 pm

Fun Fact:

The 7.5% vs 5.1% difference between the US and Canada is largely due to the US including used car sales and Canada not. Canada has done a great job over the years eliminating what’s in the inflation basket.

Perhaps that can be a good weekend blog post. If you measured Canadian inflation the way it was done back in the 80’s or 1991 what would it be now…Spoiler alert…At least double what it is now…

#58 Faron on 02.16.22 at 4:31 pm

#49 willworkforpickles on 02.16.22 at 4:02 pm
#27 IHCTD9

Hope you doom preppers have sufficient provisions for the train to run a loooong loooong ways before running off the tracks.

#59 crowdedelevatorfartz on 02.16.22 at 4:37 pm

Yep.
My 2014 Truck was purchased for 45k.
I was offered 36k for it last week. Cash.
I considering it and dump the money towards a new truck, fully loaded, through my holding company for the remaining payments/ tax right off.

Or I just sit with my mint, 8 year old truck with zero payments and 80k on the odometer.

Either way.
I’m happy.

#60 IHCTD9 on 02.16.22 at 4:46 pm

#26 AM in MN on 02.16.22 at 2:48 pm
The pain has only started. This is going to take a decade to unwind.

Those who look down on the truckers, who think freedom is overrated and prosperity comes from a Government cheque fed by printed money from the CB, will wake up one morning wondering what happened to the country that used to value the things the truckers represent.

As I’ve said before, the big picture here is a future much like the medieval past, where a few live off the rent and the serfs work two jobs to pay the taxes and the interest, like a hampster on a wheel until you die.
———

Agreed, except for the medieval part. Many will be able to hop on a plane and leave. How many Canadians have dual Citizenship? How many more born Canucks could get an easy dual Citizenship thru ancestry? Do we have a lot of well educated youth who might qualify to immigrate to some more worthwhile country?

You know the answers as well as I. A crap-ton of kids will have the ability to make an exit, and if we let it get to that, it’ll be the final bell for Canada. Just imagine if tomorrow the US revises their immigration philosophy to parallel ours. The exodus out of Canada would begin the very next day.

We’ve run up such a gigantic tab, that we now live or die based on successful importation of skilled and educated youth who might somehow foot the bill. It’s a gamble that’d make the MIT blackjack team blush. If we give ‘em good reason to bail (and we are), we won’t be hearing “winner winner chicken dinner!”, more like “we’re done like dinner”.

#61 HonestEnD on 02.16.22 at 4:47 pm

I need a lesson on how to italicize your text in the comments.

Anyone?

#62 Billy Buoy on 02.16.22 at 4:47 pm

Just dollar cost avg into WTI or BRENT OIL.

They ain’t making more of it, demands on it are great and they haven’t been searching for it in years = UP.

#63 don't poke the bear on 02.16.22 at 4:53 pm

i’ve said it before and i’ll say it again, people will be shocked to see how high rates go in the next two years.

the bank of canada, incompetent as they are, will be forced by the market to raise rates more than they want. “inflation” (read CPI) will stay persistently higher for longer. well beyond 2024.

think 3-4% prime rate. only then will “inflation” (CPI) slow down.

besides. they’ve been warning people NOT to pile on debt for what? the last 5 years?

don’t expect them to feel sorry for people when they can’t make mortgage payments.

#64 Coopoiler on 02.16.22 at 4:53 pm

Quite the coincidence that some banks are experiencing online banking issues right after the emergency measures are issues by the federal government

And there’s rain coming. Coincidence? Hardly. – Garth

#65 Søren Angst on 02.16.22 at 4:54 pm

Off topic, well Pandemic stuff.

Swedes fit to be tied about Sweden lifting restrictions.

Swedish Data guy decides to put an online survey about that (read his Bio to get some perspective).

You will probably have to vote to see the answers and be nice if you do vote like I was…

https://twitter.com/dynesius_/status/1493883822152327178
[= numerical vitriol]

A few more unhappy Swedish Campers:

https://twitter.com/KeithMEWAS/status/1491714425237258242
https://twitter.com/galinash/status/1489148305179385857
https://twitter.com/DFsuzgun/status/1488608477777911812
Lost the Tweet but one lady in Stockholm upon hearing the restrictions lifting news said she was going home to drop a tab.

I could go on but you should get the gist of it by now.

Swedes NOT happy at all with their Gov and its handling of the Pandemic…then again, who is?

I follow 100’s on Twitter be they Lefty’s, Righty’s and in betweensies. I have yet to read (unless it’s a bot):

Yes, the restrictions are good and just. I am very happy with masks, distancing and a life lived in solitude during lockdown.

‘Please, sir, I want some more.’

——————–

You are not the only one’s in a bitchy mood Canada.

Take solace in that.
[And get in line]

#66 Kirk on 02.16.22 at 4:57 pm

Charlie Munger said today that inflation is currently the biggest threat to humanity next to nuclear war. He cited examples such as the fall of the Roman Empire.

So I wonder, besides B&D portfolios (of which I have) and the RRSPs/RESPs, is there any other investment vehicle you might recommend during high inflation/rising rate environment, Garth?

#67 Wuhan we got y'all in check on 02.16.22 at 5:02 pm

similar to the two guys in the elevator I bought a new 2017 Jeep Wrangler in the winter of 2019 for about 40k. It was on clearance and heavily discounted because the new model came out and no one wanted it. I barely drive it / it has about 10,000 kms.

The dealership has called me a bunch of times in the past 8 months offering to buy it back for 45,000 at first and now 47,000

The only problem is that there is nothing interesting on the lot to buy. Jeep weather is coming this weekend!

#68 All lies and manipulated on 02.16.22 at 5:05 pm

#27 IHCTD9

“Canada is like a car careening down a mountain road, out of control with a crazed drunk at the wheel. Death could happen at any moment. In fact, it’s imminent. We just don’t know what the trigger will be, and how big of a fireball.”
…………………………………………………………………………………………………….

That’s a bit like the way i used to describe it only with a train instead – barrelling full speed down a mountain slope after its conductor’s had a stroke, violently rocking from side to side with it brakes blown off, then passing a bridge out up ahead sign and hitting a barricade across the tracks sending it ass over end off the side.

That last bits a bit ad-libbed…but what the hell…its time for a shot of scotch anyway.
=============================
LOL Ya we got a hellova conductor and he’s still alive!

#69 Dave on 02.16.22 at 5:07 pm

If you are protesting with the truckers:
– consider terrorist….wow
– banks can freeze accounts
– arrest you even if you are a peaceful demonstrator
– arrest you if you bring food or clothes for them
– can also cancel you car insurance

Wow….is there anything else. Perhaps run over you with military vehicle like they do in China

Occupation, encampment, blockades and civil disobedience is not protesting. – Garth

#70 Wrk.dover on 02.16.22 at 5:08 pm

If there really was a Federal Reserve Board, and not just a few stock investors that meet from time to time for the honorarium, the interpretation of the minutes at 2pm eastern today would have had consequence.

Assume Powel will soon have a honorary position of power at Goldman Sachs for life, plus everyone he knows is all ‘stocked’ up. So, he sure doesn’t want to shake his stock market. Therefore, token hikes, and the RE situation will remain just as bubblishious.

You can’t have the one bubble without the other.

I’m glad I have less cash to lose than others, when the cows do come home.

I think you should get to the big city (like New Minas) more. – Garth

#71 DM in C on 02.16.22 at 5:10 pm

#17 Shawn:
“…just move to Alberta to participate in the boom. Here’s a nice selection of brand new houses at good prices:”

Yeah, don’t tell them that the cap on utilities was removed and everyone is seeing $200+ monthly price increases. We have a small bungalow and all in (electric/natgas/water) our utilities cost $733 this month.

That’s as much as our first house’s mortgage payment. at 8.5%.

#72 Søren Angst on 02.16.22 at 5:12 pm

On topic.

Again, agree with all you said Garth (except the bits about the Poor Me Mills…as if).

Rates up. RE prices down (I think a major correction this year). House as ATM coming home to roost. Markets up/down as Mr. Market trying to assess what the rate increases will bring.

Many using past history to disagree today and normally that is a good starting point.

The reality is that this AD 2. Throw everything, including the past, out the door.

It’s a brand new ballgame folks.

——————-

What can we say with 100% certainty since AD 0, 2020?

Expect the unexpected.

#73 DonQuixote on 02.16.22 at 5:13 pm

Reality Check

You don’t have to be a conspiracy theorist, and the problem is that we became ‘enslaved’ in broad daylight.

Otherwise how did we become enthralled by these Covid statistics that we all know are massaged, misunderstood and misreported, how did govt manage to control our movements, gatherings, our ability to work, and get a QR code for almost 90% of the public (that they are highly reluctant to get rid of tho it makes no sense anymore). If the purpose of travel restrictions are to stop the spread of disease, 1) it’s too late when community spread already widespread for more than a year, and 2) vaccination doesn’t prevent the ill from travelling or being out in public. One could argue that it makes way more sense to do the opposite, that is limit travel to negative tests.

#74 Wrk.dover on 02.16.22 at 5:18 pm

#56 Wrk.dover on 02.16.22 at 5:08 pm
I think you should get to the big city (like New Minas) more. – Garth
__________________________________

The Jerk Hamburger vending truck is gone for the season, so what’s the point in that?

#75 IHCTD9 on 02.16.22 at 5:21 pm

#37 Stone on 02.16.22 at 3:23 pm
#26 AM in MN on 02.16.22 at 2:48 pm
The pain has only started. This is going to take a decade to unwind.

Those who look down on the truckers, who think freedom is overrated and prosperity comes from a Government cheque fed by printed money from the CB, will wake up one morning wondering what happened to the country that used to value the things the truckers represent.

———

What those occupation terrorists represent is anarchy. Oh, and their own personal interests.

If everyone valued what these anarchists value, we’d live in a country full of anarchy and tyrants running the country.

Think about that instead of dreaming your silly little fantasy.
—- ——-

If strolling out of the sauna, and easing into a hot tub after the dance party and a couple rounds in the bouncy castle is anarchy… Then I’m applying for my “Anarchy Canada” membership tomorrow.

#76 WTF on 02.16.22 at 5:22 pm

Premium gas here in Vandumb yesterday, $2.07, Yeesh

Rosie the contrarian…..

https://www.bnnbloomberg.ca/boc-playing-with-fire-if-it-hikes-more-than-3-times-rosenberg-1.1724523

Yes. I know. Ignore BNN………..

#77 TurnerNation on 02.16.22 at 5:26 pm

Elevator gossip? See the legendary account

https://twitter.com/gselevator
Things heard in the Goldman Sachs elevators (Wall Street) do not stay in the elevators. Email what you hear: [email protected]

#78 IHCTD9 on 02.16.22 at 5:27 pm

#68 All lies and manipulated on 02.16.22 at 5:05 pm
#27 IHCTD9

“Canada is like a car careening down a mountain road, out of control with a crazed drunk at the wheel. Death could happen at any moment. In fact, it’s imminent. We just don’t know what the trigger will be, and how big of a fireball.”
…………………………………………………………………………………………………….

That’s a bit like the way i used to describe it only with a train instead – barrelling full speed down a mountain slope after its conductor’s had a stroke, violently rocking from side to side with it brakes blown off, then passing a bridge out up ahead sign and hitting a barricade across the tracks sending it ass over end off the side.

That last bits a bit ad-libbed…but what the hell…its time for a shot of scotch anyway.
=============================

LOL Ya we got a hellova conductor and he’s still alive!
——

It’s always the drunk guy who was driving that walks away without a scratch!

#79 Quintilian on 02.16.22 at 5:28 pm

Shawn:

Central banks control money supply and through various money market interventions, the cost of borrowing.
Your PHD friend is just being polite not to point out the important points you left out in your article.

#80 World Traveller on 02.16.22 at 5:30 pm

The reason I’m keeping my 2010 SUV until this madness ends, spent $1000 in December to keep it on the road, worth it I think. Walked into the Mazda dealership last month, almost no cars in the parking lot and only one sedan inside. I don’t know what these sales reps are doing with themselves.

#81 IHCTD9 on 02.16.22 at 5:40 pm

#53 James on 02.16.22 at 4:18 pm
#49 willworkforpickles on 02.16.22 at 4:02 pm

#27 IHCTD9

“Canada is like a car careening down a mountain road, out of control with a crazed drunk at the wheel. Death could happen at any moment. In fact, it’s imminent. We just don’t know what the trigger will be, and how big of a fireball.”
…………………………………………………………………………………………………….

That’s a bit like the way i used to describe it only with a train instead – barrelling full speed down a mountain slope after its conductor’s had a stroke, violently rocking from side to side with it brakes blown off, then passing a bridge out up ahead sign and hitting a barricade across the tracks sending it ass over end off the side.

That last bits a bit ad-libbed…but what the hell…its time for a shot of scotch anyway.
__________________________________________
So what your saying is don’t buy a car, a new car or a used car just buy an old train. Got it.
PS I’m keeping my old used car its going to be like gold!
Oh crap I used the G word, sorry Garth
— – – —-

You missed the point. The whole conversation was created specifically just so we could bring up Scotch.

#82 rknusa on 02.16.22 at 5:49 pm

re: #3 Sean on 02.16.22 at 1:26 pm
Good call on IRs, Garth.

Real interest rates are likely to remain very negative (close to -10%) in foreseeable future.

I’m not entertaining the idea but one has to wonder – why not get a loan and buy RE? If you make money, great, if not, so many other voters would be impacted and government would have to step in to help. It sounds crazy, but it’s not impossible. The next big rescue will be for the people – MMT-style handouts.

I agree, remember Justin said he has our backs

no risk there

#83 When the Whip Comes Down on 02.16.22 at 5:53 pm

Keep telling yourself that. I know it helps – Garth
I’ll let you know when I get my pptax bill in the coming months – Gentleman’s bet……I will put up my ’54 Strat (only a custom ship n’yuk n’yuk)

Not sure if you caught Rosenbergs call on the rate hiking Cycle – 2 or 3 at most he feels. Yield curve doesn’t suggest the aggressive hikes will happen.

Have mercy

#84 Søren Angst on 02.16.22 at 5:57 pm

Almost forgot…

Dumped the expensive Nasdaq 100 ETF and with that cash loaded up + dividends this month on…

yea oil.
yeah Canada ETF.

Cheap. Liquid. Value.

Yes Garth oil ETN higher risk but check every day metrics (e.g., contango). So far +30% monthly div yield a good thing.

Monthly divs for the past few months wiping out any stock price losses…easily.

Just calc’d Jan ’22 and the weighted average div yield was 26.8%.

– Thank you Garth et. al. Your advice heeded. Threadbare portfolio less threadbare.

#85 Diamond Dog on 02.16.22 at 5:58 pm

I fear for the U.S. economy as it reflects on the world. It was Milton Friedman who said “inflation is always and everywhere, a monetary phenomenon”. Because it is. Friedman, if some don’t already know, is likely the best economist to come out of the 20th century, maybe ever. His works are associated with monetarism:

https://en.wikipedia.org/wiki/Monetarism

Monetarism plainly put, formulated by Milton Friedman, argues that excessive expansion of the money supply is inherently inflationary, and that monetary authorities should focus solely on maintaining price stability.

Let’s fast forward to today and look at the U.S. money supply. What readers are about to see are 3 charts: m0, m1 and m2. The definition of m0 is not easily defined, but would best be summarized as the summation of all cash and coin in circulation including government bonds or government debt. m0 is included to illustrate just how much Federal government borrowing has gone on. The U.S. government owes around 30 trillion right now with another 34 trillion or so circulating in the supply according to definition:

https://tradingeconomics.com/united-states/money-supply-m0

Note the dates for which most of this monetized public debt has occurred, being under Trump’s presidency (34 trillion to 60 trillion from the start of the pandemic) even though Biden is the president being blamed by media for current inflation.

M1 is the money supply that is composed of currency, demand deposits, other liquid deposits—which includes savings deposits. Look at it’s meteoric rise since the pandemic mostly under Trump:

https://tradingeconomics.com/united-states/money-supply-m1

M1’s definition is well defined here:

https://www.investopedia.com/terms/m/m1.asp

M2 is a narrowly defined money supply that has historically been used to look for inflation, defined here:

https://www.investopedia.com/terms/m/m2.asp

The U.S. m2 chart is here:

https://tradingeconomics.com/united-states/money-supply-m2

When we look at m2 when Trump first took over, m2 was a little over 13 trillion. As of March 2021 m2 was around 20 trillion. Under Biden, 1.6 trillion. So, m2 grew close to 7 trillion under Trump and 1.6 trillion under Biden (even with Biden’s trillion dollar giveaway). If we isolate the timeline of the beginning of the pandemic (March 2020 to March 2021), Trump ran up m2 roughly 4.5 trillion in the first year and Biden 1.6 trillion and counting in the second year of the pandemic.

I say this because what we hear with media is that inflation is Biden’s fault but when we look at the numbers and see where the money supply has swollen the most, it’s clearly under Trump’s presidency. We can look at it in other ways if we wish to look at it in a partisan lens. 6 of the last 7 governors in the Federal reserve are Republican.

https://en.wikipedia.org/wiki/Federal_Reserve_Board_of_Governors

The 2 governors that designed monetary policy for the Fed were also Trump appointees, Quarles and Clarida, both resigning before their terms were up for renewal. Clarida as readers know, resigned under scandal (insider trading). How big was this “quiet scandal”? Big enough for the Fed AND all sitting representatives of the house to no longer own stocks while sitting in office. The details are to be determined (immediate family owning stocks, types of bonds etc.), but this scandal made waves “in the legal sense” meaning it was big.

Did the Federal reserve make a mess of things by dramatically increasing the money supply and is to this day still printing money and buying bonds with a Fed rate at .08% with inflation at 7.5% suggestive of a Fed in disarray?

The swollen money supply, the newly minted Federal debt, inflation at 7.5% with no clear response yet from the Fed chair with rates near zero, on paper, these numbers suggest yes. The Fed has to my knowledge never this late raising rates to fight off inflation.

Getting back to m2, m2 yearly average going back from 2000 to 2020 works out to roughly a 7% a year average or 34% over 5 year increments. In Trump’s last year alone, m2 rose by 29% (going to March 2021 for transition). Biden’s first year and counting is at 8%.

Everything readers hear, labor shortage… commodity boom, supply chains, supply/demand imbalances, everything will inflate because the system is awash in money. Excess supply pours into the markets and housing and if there are shortages, it’s too the moon! But behind it all? “Inflation is always and everywhere, a monetary phenomenon”.

Looking at supply with the Fed flat footed in response and months of lag before Fed action makes a dent, be prepared for double digit U.S. inflation.

The Fed has 3 responses: Do nothing (leads to hyperinflation accelerated by a falling dollar), raise rates dramatically (controls inflation through sucking money out of the supply and breaking recessionary behavior, but causes recession) or raise rates moderately (causes years of stagflation: high inflation in prices, deflation of markets and real estate).

What does this mean for Canadian markets? It means the prime rate is going up. Probably way up (if the Fed knows what’s good for them). Commodities will remain strong for 2 or 3 quarters but beyond this, all bets are off. Big commodity selloffs will be triggered by a serious U.S. recession which is in the picture unless the Fed chooses stagflation which still hammers purchase power and crushes fixed income. There are no easy choices here now for the Fed and by proxy, the world now.

https://www.cnbc.com/2022/02/14/bullard-say-the-fed-needs-to-front-load-tightening-because-inflation-is-possibly-accelerating.html

#86 Warren-the-lagging_indicator on 02.16.22 at 5:58 pm

BOC goes first this time. I figure 4 hikes 1/4, 1/4, 1/2, 1/4. One of the few times we are actually going to lead the US. Wonder how often that has happened in the past? I guess 3. Now off to google. I bet Garth would know eh?

#87 Robin on 02.16.22 at 5:59 pm

Used car prices are truly nuts. My low km (WFH) Honda Civic Si Coupe comes off lease in May. The buyout is $12K and I can sell for $25K+ on Autotrader. No brainer.

#88 BCWally on 02.16.22 at 6:02 pm

Just read #8 Don’t poke the bear. I was a kid then, but don’t interest rates have to be higher than the rate of inflation to get it under control?
#8 has a good point, there was a lot of dickering for years with it until Fed Chair Volcker pounded it with a two by four.
I’m thinking that will happen again – nobody wants to do a 9% rate and turn the Canadian economy and homeowner in to a fire hose job.
So, five years maybe until a central banker gets it and does it again?

#89 cuke and tomato picker on 02.16.22 at 6:05 pm

Yesterday we in Victoria had the warmest temperature
in Canada at 9 degrees. Today in is even better with 10
degrees. Excellent walking and talking weather along the
water walkway in Sidney B.C or rural residential farms
etc in Central Saanich.

It was 12 in Toronto this afternoon. Minus 12 coming on Friday. – Garth

#90 Easy peasy on 02.16.22 at 6:06 pm

#61 HonestEnD on 02.16.22 at 4:47 pm
I need a lesson on how to italicize your text in the comments.

Anyone?

_____________

Like this!

Prefix your text that you want italicized/emphasized with :

-the less than symbol,

END your text with the same as above except:
-add a forward slash before you add the letter e

#91 Søren Angst on 02.16.22 at 6:29 pm

Off topic…but fun.

In case you missed it:

Trudeau Announces Invasion Of Poland
https://babylonbee.com/news/trudeau-announces-invasion-of-poland

[Bonus: Ukraine crisis diffused]

Trudeau Having Difficulty Teaching Canadian Mounties To Goose-Step
https://babylonbee.com/news/trudeau-having-difficulty-teaching-canadian-mounties-to-goose-step

[“Reports have begun to surface that a new “Intro To Goose-Stepping” course has been made mandatory at the RCMP (Royal Canadian Mounted Police) Training Academy in Regina, Saskatchewan.”]

——————-

They will not let go of Trudeau. They did their fake news you can trust research.

I liked it that they had to spell out what the RCMP abbrev. stands for…Americani.

#92 under the radar on 02.16.22 at 6:35 pm

G- Wagens are very different than most other cars in that there has been a waiting list for these for many years and deliveries to Canada are tightly constrained.
The dealers always got full list, zero discount, and then the buyer flips it for up to a 100k over list. I also think Mercedes makes you covenant not to sell or export within a certain time period. This was pre-pandemic and continues .
You will never see a G-wagen in a Mercedes dealer’s showroom for sale brand new. They are spoken for years in advance.

#93 Ed on 02.16.22 at 6:41 pm

So our brave hero addressed the house today by calling MP Melissa Lantsman a Nazi flag waver.

I guess he didn’t realize she’s Jewish.

But pretty much par for the course lately.

#94 DON on 02.16.22 at 6:45 pm

#89 cuke and tomato picker on 02.16.22 at 6:05 pm
Yesterday we in Victoria had the warmest temperature
in Canada at 9 degrees. Today in is even better with 10
degrees. Excellent walking and talking weather along the
water walkway in Sidney B.C or rural residential farms
etc in Central Saanich.

It was 12 in Toronto this afternoon. Minus 12 coming on Friday. – Garth

*********

Come on …it was only warm when the sun was out in the mid day. The chill of the ocean sends the shivers through one’s body…but will take the rainless weather.

#95 Nonplused on 02.16.22 at 6:48 pm

A G-Wagon is just a very expensive excuse for a not so great version of the Jeep Wrangler. Save your money and get a Rubicon. It’s less than half the price. You can’t spend enough on lift kits, big wheels, and accessories to come close to a g-wagon in price. And it is a lot cheaper to fix when you bust something off road, which you will.

Also new to the market is the Ford Bronco, which is very similar to the Jeep, but you can’t get one. Ford had the misfortune of releasing it right about when they couldn’t get any chips. They also are selling well above MSRP.

#96 willworkforpickles on 02.16.22 at 6:54 pm

#58 Faron
…………………………

Sure. More than enough. You?

#97 yvr_lurker on 02.16.22 at 7:00 pm

Dragonfly had an interesting comment yesterday. The Gov’t did essentially zero to curtail all forms of money laundering in Canada involved in real estate purchases. Yet, the powers and cooperation with financial institutions they have just granted themselves to go after “designated individuals” to stop the protest is ultra swift and rather arbitrary. What exactly is the definition of a
“designated individual”. Will the banks collectively freeze their assets, deny them accounts and mortgages in the future? Drivers licenses are revoked for XXX years etc… Who gets to decide whether someone is a “designated individual” (a police officer or bureaucrat?). Is there any appeal on the designation in the court of law? Don’t think so.

I fully realize that we absolutely needed to remove protesters blocking key avenues of trade between the US and Canada. However, I can also see how this rather draconian and historical emergency measures act leads to the proliferation of a larger segment of society opposed to all forms of Gov’t control.

#98 wallflower on 02.16.22 at 7:04 pm

#60 IHCTD9 on 02.16.22 at 4:46 pm
dual citizens – yep, I think, too, many recent immigrants with those passports might just hop back

I have a dual citizen son living in Germany, Switzerland, now Portugal. Think he is getting to a point of why return? For what? To what?
Kind of funny… to think Canada will be importing hundreds of thousands and potentially exporting the same number! in the very near future!

#99 Faron on 02.16.22 at 7:04 pm

#84 Søren Angst on 02.16.22 at 5:57 pm

… Yes Garth oil ETN higher risk but check every day metrics (e.g., contango)

Just calc’d Jan ’22 and the weighted average div yield was 26.8%.

—-

three things.

1) The WTI Oil futures curve is currently backwardated, not in contango.

2) Yield comes at a cost of higher risk (NSTAAFL)

3) If the US/Russia tensions dissipate, you may want to think about what will happen to the price of oil.

This is not a prediction. I’m highlighting risk for you and others who may be considering an oil commodity play. IMO, there’s lower risk in the stocks of producers given that they are very profitable even at a far lower oil price. GL.

#100 Michael Motorcycle on 02.16.22 at 7:09 pm

Garth,

Whens the next book, or tour?

Asking for a friend.

#101 Hurtin' Albertan on 02.16.22 at 7:16 pm

Banks are moving to freeze accounts linked to convoy protests.

The government is also ordering insurance companies to suspend policies on vehicles that are part of an unlawful “public assembly.”

https://www.cbc.ca/news/politics/emergencies-act-banks-ottawa-protests-1.6353968

How many occupiers (and their financial supporters) will be de-banked?

How many of those with vehicles tied to these protests will be un-insurable?

https://www.gazette.gc.ca/rp-pr/p2/2022/2022-02-15-x1/html/sor-dors22-eng.html

#102 Faron on 02.16.22 at 7:23 pm

#84 Søren Angst on 02.16.22 at 5:57 pm

Do you use those covered call ETNs for tax efficiency? I can’t see a reason to hold them otherwise. Comparing Horizon’s HUC to USOI, the price underperformance of USOI is staggering and in no way makes up for the dividend.

USOI’s 1 year performance is 5.73% with a 20ish percent dividend
HUC’s performance is 50%. Even with taxes, this seems a no brainer.

I haven’t looked at longer times scales, is the total return over a longer period better?

#103 Ustabe on 02.16.22 at 7:27 pm

#90 Easy peasy on 02.16.22 at 6:06 pm

#61 HonestEnD on 02.16.22 at 4:47 pm
I need a lesson on how to italicize your text in the comments.

Anyone?

_____________

Like this!

Prefix your text that you want italicized/emphasized with :

-the less than symbol,

END your text with the same as above except:
-add a forward slash before you add the letter e
+++++++++++++++++++++++++++++++++

Don’t you hate it when there is no edit function?

I think they are called carets. The “” keys.
So pick what you want to append the HTML to, place a after

You can do much more than italicize tho…
™ © ° $ are all HTML commands. To get symbols you use a bit of ascii…for instance the upside down question mark is push and hold the alt key and type in 168.

¿, see?

You can bold stuff

There used to be some real annoying ones but most websites are now programmed to ignore them. Lets see if Garth’s webmistress is hep to my ’80s knowledge:

boing

#104 Nonplused on 02.16.22 at 7:30 pm

I don’t think anyone believes the used car retention index is going to stay where it is. The main driver is the unavailability of new cars. Some day, maybe in 2-3 years, maybe more maybe less, new cars will be manufactured in a quantity to fulfill underlying new car demand. Maybe they will also be able to catch up on the current shortfall, although that will take more time than restoring typical production. You don’t build a new factory for short term demand. They’ll have to go about it with extra shifts and even that has problems on the labor side. They’ll have to hire and train a bunch of people they know they will not need in 3 to 5 years.

Zero hedge ran a piece looking at what used cars were leading the charge higher:

https://www.zerohedge.com/markets/used-cars-are-surging-price-heres-10-models-are-leading-price-explosion

Which car is leading the charge? The Dodge Grand Caravan. Not exactly a car known for quality, performance, trouble free ownership, or long life, but it has seating for 7 and a good seat fold down system for cargo. In fact all 10 of the top 10 movers are in some way practical, inexpensive cars, with function over form. It’s the cars people need that are moving fastest, not the ones they want.

So what happens when covid is over and supply chains return to normal (two big assumptions, neither guaranteed)? Well, the used car retention index should head back to normal over time, which it is assumed will tame inflation. But will MSRP stay where it is, move down, or head higher with everything else? Remember, the used car retention index is just that, an index, and it is indexed to MSRP, so it can head back to “normal” and still contain overall higher prices, as it has the whole time MSRP has been moving up since the invention of the automobile.

But it is a terrible time to buy a used car. The value just isn’t there. The idea used to be you would get a slightly used car 2 – 4 years old for half the price of a new one. The number of kilometers left in the useful life of the car made cost price per kilometer lots less than buying new. That deal is no longer available, and now you are just as well off to buy a new one based on cost per kilometer. If you can find the one you want, that is. Selection is limited, and wait times for custom orders are unheard of.

And you can find new 2021 Wranglers on the lot, if you are willing to live with a “Sport”. Yes, we are back to hand crank windows. But it is 1/4 the cost of a G-Wagon and has the same fording depth. Go get yourself one, because they are bound to run out of those too if things don’t straighten out.

Alternatively, if MSRP starts to reflect 5-7.5% inflation AND financing costs double, good lord.

It’s time to buy all the things (except houses and used cars). Lock in the financing though (so “buy” current interest rates).

#105 Ustabe on 02.16.22 at 7:36 pm

When in the 1970’s was the backbone of your web software written?

The are supposed to be inside those quote marks above.

So to HTML something you type (b)something(/b) for bold. Only sub the carets for parenthesis.

(i)something(/i) gives you italics.

You know the very infrequent poster who has pale yellow background to his/her posts? That is HTML as well. Or you can colour your words.

secret message back in the day was to type your message, make that the same colour as the background then only those in the know could drag they mouse over it to see it.

bounce

I’m going to bet this one won’t work either.

#106 willworkforpickles on 02.16.22 at 7:39 pm

#85 Diamond Dog

“There are no easy choices here now for the Fed and by proxy”
……………………………………………………………………………………………………….

And that’s it too, the Fed is left with no easy choices with only themselves to blame for kicking the can of sound fiscal policy down the road again and again for far too long as they’ve waxed corrupt over time.
Now they are just left with smokescreens and games as they’ve devolved into madness.

#107 Japanese Garden on 02.16.22 at 7:42 pm

#85 Diamond Dog on 02.16.22 at 5:58 pm

I was going to dig out the book “Money Mischief” but couldn’t find it. Pretty sure he used M1 for predicting inflation,not M2. But I could be wrong.

Also, you have to consider supply chain disruptions as well as a limited service economy, thus calling it transitory.

#108 Uncle Thomas on 02.16.22 at 7:45 pm

Excuse me, I feel like I’ve slipped into some kind of bazarro world. Trudeau has turned Canada into a police state with him as the absolute dictator and there is no reaction on this site. Everyone is still yammering about interest rates and house prices. This is not about science and medicine, this is about power and government control of the population. Do you not understand what has happened in Canada?

#109 AM in MN on 02.16.22 at 7:46 pm

#37 Stone on 02.16.22 at 3:23 pm
#26 AM in MN on 02.16.22 at 2:48 pm
The pain has only started. This is going to take a decade to unwind.

Those who look down on the truckers, who think freedom is overrated and prosperity comes from a Government cheque fed by printed money from the CB, will wake up one morning wondering what happened to the country that used to value the things the truckers represent.

———

What those occupation terrorists represent is anarchy. Oh, and their own personal interests.

If everyone valued what these anarchists value, we’d live in a country full of anarchy and tyrants running the country.

Think about that instead of dreaming your silly little fantasy.

——————————————————-

You don’t understand the difference between Freedom and Anarchy. No one who is advocating for freedom is advocating for anarchy. Tyrants exist in societies with no freedom, you have it backwards.

Canada is moving ever closer to a Social Credit system, like China. The distressing part is that so many people (like you) seem to think that it would be a good thing. I bet when you look at that picture of the guy in Tienanmen Square in front of the tank, you cheer for the tank.

We are already closer than most realize. Have you crossed the border lately? Did you upload the ArriveCAN App? No need to show the QR code, they just upload your phone data from a distance. No App, no cross border.

Now they can monitor all your financial data, you have no recourse to Courts. Of course, this doesn’t matter if it’s not your bank account being closed, your business being bankrupted etc. But what if it is, and no one else cares?

Is it that hard to see the Vax passport now required for Air or Train travel being expanded, like in China to include that you’re not behind in your taxes? Wouldn’t that have majority support?

How about not having posted the wrong thoughts on social media, as the nice policewoman from the OPP reminded the woman in Ontario last week when she showed up at her house?

Many of you on the left think this “show of strength” by Jr. will make him more electable. If it is properly explained by the new CPC leader, I’m sure it won’t.

#110 beener on 02.16.22 at 7:49 pm

New Omicron variant BA.2 for our enjoyment. It’s all part of the plan.

#111 Alberta Nomad on 02.16.22 at 7:51 pm

EQ Bank has a hybrid chequing/HISA that yields 1.25% interest currently, and in the before times yielded 2.45% which at the time was higher than inflation. Works well if you are plunking paycheques into it and paying your bills from it. I get enough perks from my big green bank and with the pandemic throwing everything into chaos I have yet to fully utilize EQ Bank, but it seemed like a good deal two years ago for those with basic banking requirements.

#112 Faron on 02.16.22 at 7:56 pm

<i> and </i>

for italics.

#113 Flop… on 02.16.22 at 8:03 pm

“The loonie would crash, interest rates would soar and cabbages would be $18. – Garth”

////////////////////////

Yeah, as a carnivore I’m o.k with this one.

$18 Kangaroo Patty would upset me…

M47BC

#114 Faron on 02.16.22 at 8:05 pm

Basic guide:

italics: <i>italics</i>
bold: <b>bold</b>
strikethrough: <s>strikethrough</s>

block quote:

<blockquote>block quote</blockquote>
Links: <a href=”https://greaterfool.ca”>Links</a>

#115 oops on 02.16.22 at 8:09 pm

#50 Faron on 02.16.22 at 4:09 pm

“Looking forward to the gold medal hockey match-up tonight. Will anyone else be watching?”

_______

And to actually everyone else who posts multiple times in ‘got nothin’ better to do’ tones?!

Seriously check your social status in life.

From here?

No go zone.

#116 Shawn on 02.16.22 at 8:11 pm

#71 DM in C on 02.16.22 at 5:10 pm
#17 Shawn:
“…just move to Alberta to participate in the boom. Here’s a nice selection of brand new houses at good prices:”

Yeah, don’t tell them that the cap on utilities was removed and everyone is seeing $200+ monthly price increases. We have a small bungalow and all in (electric/natgas/water) our utilities cost $733 this month.

That’s as much as our first house’s mortgage payment. at 8.5%.

**************************************
Natural gas was dirt cheap in Alberta for a long time. We did have some spikes circa 2005 was it? got pretty high for a short time.

Electricity was also so cheap almost ever since deregulation in the year 2000 (cheap coal and cheap natural gas) though the delivery charges were high (like every place) the commodity was very low.

Dude, I think people in Nova Scotia (my home province and where I am visiting this fine evening) have been facing thousand dollar a month utility bills since about 1980. Try heating a house in Nova Scotia with electricity or fuel oil. Natural gas is not available. Think about filling up a standard 200 gallon fuel oil tank and at the coldest months it can be gone in a month or not much longer.

You think utilities in Toronto are less than $733 a month in winter? I doubt it. You got an awesome deal for the last 20 years or more.

Even with higher utilities the cost of living in Alberta is still far lower than Toronto. Need I mention only GST in Alberta with no provincial sales tax? lower personal taxes too.

Winners win, and move to win if necessary. No one is forced to move or to win or to bother to try to win in this life. I merely point out the opportunity.

#117 crowdedelevatorfartz on 02.16.22 at 8:16 pm

@#113 Floppie

“$18 Kangaroo Patty would upset me…”

++++

I’d be more upset if the package of 8 Rooburger Buns cost $10…..

Faron may have created an italics monster……

#118 The West on 02.16.22 at 8:27 pm

https://www.youtube.com/watch?v=W_CgQWiQus8

#119 tired of politicians, current, past and future on 02.16.22 at 8:28 pm

Answer: Peace, order and good government.
Question: Name three things that the federal liberal party is not delivering to Canadians.

#120 Nonplused on 02.16.22 at 8:32 pm

#71 DM in C on 02.16.22 at 5:10 pm
#17 Shawn:
“…just move to Alberta to participate in the boom. Here’s a nice selection of brand new houses at good prices:”

Yeah, don’t tell them that the cap on utilities was removed and everyone is seeing $200+ monthly price increases. We have a small bungalow and all in (electric/natgas/water) our utilities cost $733 this month.

That’s as much as our first house’s mortgage payment. at 8.5%.

——————————————

Energy prices are up all over the world, and the amount you use is always up over the winter. Both electricity demand and heating are extremely temperature dependent. You can typically expect to spend about 70% of your annual heating bill in the winter.

If budgeting is your problem, almost all energy retailers offer a smoothed monthly plan. It flattens the payments, so you don’t see the spike in the winter. You pay a lot more in the summer though.

Either way the annual average energy bill for all sources, electricity, natural gas, propane, heating oil, gasoline, it’s all through the roof all across the nation and the world. The pinwheels aren’t helping!

#121 Gravy Train on 02.16.22 at 8:46 pm

#109 AM in MN on 02.16.22 at 7:46 pm
“[…] Many of you on the left think[…].” This may come as a shock to you, but most of us are in the centre. We can’t understand wild-eyed extremists like you, whether on the left or the right.” :(

#122 Pink Dictator on 02.16.22 at 8:51 pm

I’m a little concerned that Trudeau thinks he can seize bank accounts and cancel insurance policies for people associated with the “protests” or “insurrections” or “occupations”, whichever you prefer to call them. It seems a little like handing out jail sentences without due process, a jury, and habeas corpus. We are looking a Guantanamo thing here without the cages. Or with financial cages. Perhaps that is why the phrase “terrorists” is being bantered about. People labeled “terrorists” don’t get no day in court, but the odd one does get $10,000,000 in compensation after being falsely imprisoned.

Remember, a Canadian tyrant is no laughing matter, even if it is Justin Trudeau.

#123 Wrk.dover on 02.16.22 at 8:53 pm

I phoned the the wisest person I have ever known a while ago, but he couldn’t talk because Tucker Carlson is on!

Covid is not the worst of the current pandemics …

#124 Moh on 02.16.22 at 9:04 pm

Hey Garth just got back from the States and all I have to say is thank God we live in Canada. Very sad watching the people of America glorify what they see on television. America has a culture that everyone wants to be as rich as the famous people on TV. If you are a modest realist your considered a loser. Super proud of our great nation and all it has. Canadians are far more informed and have bigger hearts. Let me give you an analogy of Canada of what I think about America. If America was a body part from the human body which represented the earth. America would be the ass then!

#125 DON on 02.16.22 at 9:14 pm

Read an article somewhere in the last week where Coca Cola, Starbucks, McD’s etc stating that they have brand power and expect little complaining from customers as they continue to raise prices. The guy from Starbucks stated that in fact they have seen their customer base grow. (for now)

As everything goes up…the squeeze gets worse for people that love those brands.

#126 crowdedelevatorfartz on 02.16.22 at 9:20 pm

Vancouver’s Invisible Mayor Kennedy Stewrat is in hot water again.

New radio ads by hizzoner brags that he’s going to build 10,000 new rental suites.

Trouble is….. the ads are paid for by taxpayers…..in an election year.

Apparently the mayors office sees no problem using taxpayer money to promote himself.

Stay tuned folks.
Nov of this year is “decision day” in Vandoomer.
Mayor Stewrat raised property taxes sky high this year and he’s not loved.

#127 kommykim on 02.16.22 at 9:23 pm

RE: #21 Realist on 02.16.22 at 2:39 pm
At the rate shelter costs are skyrocketing, going to jail would be a better option: Free shelter and you might get a chance to shag the prison guard like you hear on the news.

=======================================

In Canada sure… Don’t try that in the USA:
https://en.wikipedia.org/wiki/Pay-to-stay_(imprisonment)

#128 willworkforpickles on 02.16.22 at 9:27 pm

# 108 Uncle Thomas

“Trudeau has turned Canada into a police state with him as the absolute dictator”
………………………………………………………………………………………………………

Too bad people like 80’s Sun columnist Lubor Zink aren’t with us any longer. He’d have the little twit hollowed out with one column.

#129 Quintilian on 02.16.22 at 9:29 pm

#90 Easy peasy:
All you need to know can be learned here:

https://www.w3schools.com/html/

#130 Flop… on 02.16.22 at 9:44 pm

Spent most of my time working on houses, whenever I worked on condo towers, including the one named in this lawsuit, I heard about nothing but problems with the glass.

The only shard I like in a glass is Chardonnay…

M47BC

“Court certifies class-action lawsuit over windows at Vancouver’s Shangri-La tower.”

https://vancouversun.com/news/local-news/vancouver-shangri-la-tower-windows-lawsuit

#131 Flop… on 02.16.22 at 9:44 pm

Spent most of my time working on houses, whenever I worked on condo towers, including the one named in this lawsuit, I heard about nothing but problems with the glass.

The only shard I like in a glass is Chardonnay…

M47BC

“Court certifies class-action lawsuit over windows at Vancouver’s Shangri-La tower.”

https://vancouversun.com/news/local-news/vancouver-shangri-la-tower-windows-lawsuit

#132 Juve101 on 02.16.22 at 9:46 pm

Inflation won’t be around for the long term. In the long term, the slowdown of population growth and the acceleration of technological improvements are huge deflationary forces. Deflation is in our future.
Central banks would love to have a few years of inflation running hot to eat at the huge national debt, getting to the age of deflation with as little debt as possible. Hence I don’t believe we’ll be seeing serious rate hikes, just a bit here and there.

#133 Doug t on 02.16.22 at 9:46 pm

I have always said the worse thing that ever happened to me was becoming an adult

#134 Ponzius Pilatus on 02.16.22 at 9:48 pm

It’s Wednesday, 6:45 pm PDT.
Has Putin invaded yet?
That’s why you should never trust a Commie.

#135 Doug t on 02.16.22 at 9:51 pm

#89 cuke and tomato

Yeah the homeless downtown were literally suntanning- what a beautiful city – yay us woohoo

#136 HonestEnD on 02.16.22 at 10:19 pm

Here’s my attempt…

Thank you Easy Peasy and Faron for the lessons.

Cheers

#137 HonestEnD on 02.16.22 at 10:28 pm

#103 Ustabe on 02.16.22 at 7:27 pm

Still not ready for the upside down question mark. That’s level 2…

appreciate all the tips

#138 Faron on 02.16.22 at 10:30 pm

#117 crowdedelevatorfartz on 02.16.22 at 8:16 pm

@#113 Floppie

“$18 Kangaroo Patty would upset me…”

++++

I’d be more upset if the package of 8 Rooburger Buns cost $10…..

Faron may have created an italics monster……

Never confuse formatting with style.

#139 Russ on 02.16.22 at 10:41 pm

Thanks Faron.

It’s almost time for Women’s Gold hockey game!

See you all tomorrow. Maybe we can talk about doing brake jobs on our cars again.
insert big grin

Cheers, R

#140 Teetime on 02.16.22 at 10:42 pm

#33 Reality Check
Exactly what I have been thinking. Well said, you are not alone. I have read a few other similar comments.

#141 FriedEggs on 02.16.22 at 10:47 pm

The ‘normals’ are in for a rude awakening. Hopefully some know how to swim. If not, better learn.

Atlas must shrug.

#142 Sail Away on 02.16.22 at 11:02 pm

#124 Moh on 02.16.22 at 9:04 pm

Hey Garth just got back from the States and all I have to say is thank God we live in Canada. Very sad watching the people of America glorify what they see on television. America has a culture that everyone wants to be as rich as the famous people on TV. If you are a modest realist your considered a loser. Super proud of our great nation and all it has. Canadians are far more informed and have bigger hearts. Let me give you an analogy of Canada of what I think about America. If America was a body part from the human body which represented the earth. America would be the ass then!

———-

Hmm.

Carry the analogy further: if America is the ass, what would the person who just exited America be?

#143 Sail Away on 02.16.22 at 11:11 pm

#125 DON on 02.16.22 at 9:14 pm

Read an article somewhere in the last week where Coca Cola, Starbucks, McD’s etc stating that they have brand power and expect little complaining from customers as they continue to raise prices. The guy from Starbucks stated that in fact they have seen their customer base grow. (for now)

As everything goes up…the squeeze gets worse for people that love those brands.

———

Yes, definitely. Warren Buffett has mentioned a few times that the discretionary consumer companies do ok in inflationary times while ones with high fixed costs and limited flexibility (resource sector, trains, etc) take a hit.

I wish Chick-Fil-A was a public company. Ain’t nobody giving up that slice of heaven no matter the cost!

#144 PastThePeakw on 02.16.22 at 11:14 pm

7 rate hikes? My upper is 4 (most likely 3) – and I am talking Fed (the BoC isn’t relevant). If they get higher than that, I will certainly admit I was wrong (unlike some others…)

It is not because “the gov’t knows that people can’t afford it” (they don’t care). It is because the bond & stock markets won’t like it AND the economy is not that strong. A decline of 20% on the S&P500 is likely to make them pause, and 30% will reverse the bus…

#145 Tinpot Economist on 02.17.22 at 12:05 am

Thanks to BNN’s Tara Weber for the Nutrien heads up! Up 5% in after hours, on strong results.

If Russia attacks Ukraine , Potash will skyrocket, as Belarus (Belarusian) potash will be cutoff. Of course hoping it does not come to that.

#146 other guy in Vancouver on 02.17.22 at 1:14 am

My MP sent me (well, spammed me) a link to a questionnaire “Pre-Budget Consultations 2022”. Let ’em have it everyone.

https://www.canada.ca/en/department-finance/programs/consultations/2022/pre-budget-consultations.html

#147 All lies and manipulated on 02.17.22 at 1:17 am

Ya yay wahoo peeps are tired of our dictator.
Their finally getting it what I saw years ago.
I feel like a pianos been lifted off my back. A glimmer of hope.

Love your comments Doug t :-) you #1
IHCTD9 and others too…Ya You too Garth

#148 millmech on 02.17.22 at 1:58 am

#84
USOI, pays a nice divy as well, check them out, cheap at $5.35.

#149 JoshuaFalken on 02.17.22 at 3:43 am

“Adulting is hard. Welcome.” Thanks for this, Garth. A slap in the face of all us young and middle-aged folks who’ve had their chance of ever generating wealth taken away from them. Insane RE prices over >10 years, now rampant inflation and an about-to-implode stock market. No matter how hard one works, there is no safe place. Maybe this is the reason behind the “mysterious” Great Resignation? Corrupt politicians who have implemented policies over decades which coincidentally only benefitted their own old-money friends, throwing the younger generations under the bus. Meanwhile, I get to work my a** off in toxic, stressful, burnout-creating work places so that some old fart can buy their third house. At the same time, it’s been clear for a while that I will never be able to afford even one – and now also no nice car or vacation anymore. I’ve had it – I will focus on my family, my health, my hobbies. Good luck with your “capitalism”.

#150 I don’t know on 02.17.22 at 6:51 am

#58 Faron on 02.16.22 at 4:31 pm

This comment section almost always has some iteration of those types at all times. For fun, you can go back to the blog’s comment history and read about imminent collapse in 2011, 2012, 13, 14 etc.

Our host’s current blog post also includes central bank policy. This type of topic usually attracts many weird doomer/conspiracy types. It all boils down to fear. Fear with a dose of cynicism, paranoia, and confusion. Blaming the current inflation solely on central bank policy is a gross simplification, but it allows for a false sense of clarity in a scary world of confusion and constant change.

In short, those comments are for entertainment only.

I enjoy your posts by the way, particularly when you comment on the markets.

IDK

#151 crowdedelevatorfartz on 02.17.22 at 7:07 am

@#134 Political Ponzies Predictions

“Has Putin invaded yet?
Never trust a commie.”

+++

Are the Olympics over yet?
And no we dont trust Xi Jinping.

P.S. The richest man in the world Vladimir Putin isn’t a communist.
Far from it.
He has murdered, looted, poisoned, jailed and lied his way to the top and intends on staying there.
His own people be damned.
It won’t be NATO that defeats him.
It will be the thousands of Russian body bags and funerals that will be his down fall.
If he’s lucky he’ll end up somewhere in Africa or Asia in another corrupt country run under a dictatorship

OR his head will be on a pike above the cheering mobs….outside the Kremlin.

I’m hoping for the latter.

#152 crowdedelevatorfartz on 02.17.22 at 7:25 am

“Bill Gates is controlling the vaccine microchips”

Why would anyone waste their time with drivel such as microchips when an Israeli spyware company can sell anyone, anywhere the iphone software to download all your passwords, texts, files, your search history…etc.etc.etc.

https://www.reuters.com/technology/how-saudi-womans-iphone-revealed-hacking-around-world-2022-02-17/

It can also SEND files , photos, turn on your microphone to listen and the cameras to watch.
All while your phone appears to be off.

Just when you thought the microchips were over…..

#153 willworkforpickles on 02.17.22 at 7:36 am

#150 I don’t know

You really and truly don’t have a clue.

#154 crowdedelevatorfartz on 02.17.22 at 7:45 am

@#146 other guy

Great govt of Canada questionnaire for the up coming budget process.

https://www.letstalkbudget2022.ca/let-s-talk-budget-2022/survey_tools/questionnaire1

I skipped all the politically correct, non binary, non racial answers they offer you to choose from and went directly to “other” so I could voice my opinion.

I highly recommend people “voice their opinion” to the govt.
:)

#155 EpsteinsIsland on 02.17.22 at 7:57 am

Remember folks it’s Agenda 2030. We’ve got 8 more years until the world is remade.

#156 crowdedelevatorfartz on 02.17.22 at 8:01 am

From the ” only govt could be this stupid ” file.

Covid restrictions are ending.
Masks are coming off.
Everything is opening up.

And the BC Govt proudly announces.
“20 MILLION rapid covid test are coming…..”

https://vancouver.citynews.ca/2022/02/16/bc-rapid-test-public-use/

Slothful bureaucrats and their head in the sand processes.
Too little too late.

These were needed 2 years ago.
Now?
More plastic for the landfill.

#157 Sail Away on 02.17.22 at 8:18 am

Good work to the women’s hockey team! Even though it’s a bit painful personally since I have long-running $5 bets on any US-CAN sports matchups with all my Canadian amigos, it was worth it for the good game. Unfortunately, that $20 is gone forever with no chance to win it back on the men. Sigh.

#158 Prince Polo on 02.17.22 at 8:22 am

#76 enthalpy on 02.15.22 at 5:56 pm
I have friends in IB and even they are having trouble breaking into the market. And they are the poster children for high salaries and ‘success’.

When even Investment Bankers are having trouble getting into the property market, is this not a sign that we have met the end of the road/cliff? The bigger this thing inflates, the more concerned I get for subsequent generations…is Scorch’d Earth really the only thing that will snap people back to some sense of fiscal reality? On the other hand, we could have price increases forever, and then avg homes sell for infinity.

Both scenarios sound riDONKulous.

#159 Ponzius Pilatus on 02.17.22 at 8:33 am

#146 other guy in Vancouver on 02.17.22 at 1:14 am
My MP sent me (well, spammed me) a link to a questionnaire “Pre-Budget Consultations 2022”. Let ’em have it everyone.

https://www.canada.ca/en/department-finance/programs/consultations/2022/pre-budget-consultations.htm
—————————————
Well, then don’t complain that you live in a dictatorship.
Don’t get that in Russia or China.

#160 Shawn on 02.17.22 at 8:35 am

Money Printing?

#79 Quintilian on 02.16.22 at 5:28 pm

Shawn:

Central banks control money supply and through various money market interventions, the cost of borrowing.
Your PHD friend is just being polite not to point out the important points you left out in your article.

*************************
Quintillian, I am quite happy if what I actually said in my article is true. (And if someone convinces me some things I said were wrong, then great since then I would learn something). I always consider it a very weak thing when people say that someone else neglected to mention such and such.

Whatever things you think I left out can be included in your own article.

#161 Canadian Patriot on 02.17.22 at 8:57 am

@#143 Sail Away on 02.16.22 at 11:11 pm
#125 DON on 02.16.22 at 9:14 pm

Read an article somewhere in the last week where Coca Cola, Starbucks, McD’s etc stating that they have brand power and expect little complaining from customers as they continue to raise prices. The guy from Starbucks stated that in fact they have seen their customer base grow. (for now)

As everything goes up…the squeeze gets worse for people that love those brands.

———

Yes, definitely. Warren Buffett has mentioned a few times that the discretionary consumer companies do ok in inflationary times while ones with high fixed costs and limited flexibility (resource sector, trains, etc) take a hit.

I wish Chick-Fil-A was a public company. Ain’t nobody giving up that slice of heaven no matter the cost!

MMmmmmm, chick-fil-a.
food of the gods, truckers and conservatives.

#162 crowdedelevatorfartz on 02.17.22 at 9:05 am

Ponzie.
Did Russia shell a kindergarten?

https://www.reuters.com/article/us-ukraine-crisis/kyiv-west-fear-pretexts-for-invasion-after-shelling-in-east-ukraine-idUSKBN2KM107

#163 OKD on 02.17.22 at 9:27 am

#149 Joshua Falken
Yes, because becoming successful (being able to afford a 2nd home etc.) has historically been so easy, right?
Because people haven’t worked *very* hard over *long* spans of time to become successful and achieve such things, right?
Because it used to be the case that you started a job as a young person and the world fell at your feet, right? The Boss fell all over himself to bestow comforts and perks on you and generally feathered your work-nest as his top priority, right?
Workplaces have never been tough before in history right?
Yes, by all means – do give up and adopt a defeatist personal ideology; good plan, son.
And as a bonus you’ll have plenty of compatriots – there’s certainly no shortage of people with such loser mindsets.
This is something I’ll have to contemplate further at the cabin this weekend after working *much* harder than you for 30 years to buy it in a self-made fashion.
Best,

#164 Sail Away on 02.17.22 at 9:56 am

#161 Canadian Patriot on 02.17.22 at 8:57 am

MMmmmmm, chick-fil-a.
food of the gods, truckers and conservatives.

———

Cracker Barrel breakfast, Chick-Fil-A lunch. Man oh man. My people.

#165 Observer on 02.17.22 at 10:28 am

SailAway’s idol, “Elon Musk waded further into the political controversy over vaccine mandates that’s gripped Canada for weeks, tweeting a meme making a satirical comparison between Prime Minister Justin Trudeau and Adolf Hitler.”

Meanwhile, rational, self-secure, empathetic people are reconsidering buying a Tesla.

https://www.bloomberg.com/news/articles/2022-02-17/musk-ratchets-up-trudeau-criticism-with-hitler-comparison-meme

#166 Dharma Bum on 02.17.22 at 10:32 am

Tough times:

Inflation looming
Interests rates rising
Stock market volatility
House prices outta control
Canada becoming a dictatorship
Fox News covering Canada more than the CBC is
Justin Trudeau losing what little grip he had on reality

Meh.

Real problem: My motorcycle insurance premium got seriously jacked up from $980/year to $2900/year.

No explanation. No reason. Intact obviously doesn’t want to insure riders.

So, anybody know of a good motorcycle insurance provider in Ontario??

Lemme know. Much appreciated.

#167 Diamond Dog on 02.17.22 at 10:36 am

I feel compelled to offer more commentary on my earlier comment for a number of reasons. It can’t be helped really, long commentary on a subject like inflation to do it true justice is necessary in the effort of being thorough, but there’s more.

Specifically, m0 is poorly defined online and as a consequence I think, poorly understood. m0 is connected to anything the Fed (talking U.S. here) is on the hook for. This would include all Federal bonds used for purchases on it’s balance sheet as well as all types of Federal bonds i.e. Federal public debt on top of currency in circulation.

To calculate Federal debt from m0, you would subtract m2 and subtract the balance sheet from total Fed bonds out there including all other liabilities found for example in the repo market, knowing that the assets on the balance sheet can change in value so it’s not a simple math equation.

m0 is used by economists to help determine the risks to Fiat currency values. m0 is limited in that the total m0 doesn’t describe the full risk to a currencies default or risk of hyperinflation. Debt to GDP ratios are in my view, a better indication. m0 is useful in that a dramatic increase indicates a major increase in the money supply, but m0 can be misleading in that assets in the balance sheet of the Federal reserve can offset much of the increase in Government bonds or total m0.

There are many other factors involved with currency risk calculation (which economists need to do in looking at the risks of hyperinflation) such as the size and health of the economy and what other forms of debt in the future a Fiat currency could be forced to nationalize or rescue. MBS buyouts by the Fed during and after the GFC come quick to mind as an example.

Other examples include intergovernmental debt defaults from states, provinces or municipalities. To big to fail bailouts of the private sector (bonds & banks) also offer a measure of risk.

Large percentages of government bonds coming up for renewal in short time frames pose a very large degree of risk (think Spain, nearly 38% of government bonds coming up for renewal in 2013, 2014 and what happened with inflation there).

When we think of the Fed buying it’s own treasury bonds in the last 2 years, this is a way of the Fed mitigating it’s own risk from bond market disruption. Slightly off topic, but when the Fed talks about reducing it’s balance sheet, the Fed isn’t talking about treasuries but MBS’s specifically. Considering valuations in the housing market, these MBS’s will likely devalue as rates rise to fight off inflation.

To summarize, m0 is a useful tool in determining risk to a nation’s currency by alerting economists or pleb wonk cranks like myself of a major pop in Federal debt that can cause undue risk to a nation’s currency. It should go without saying that a prelude to hyperinflation is a sharp drop in currency.

All that said, did the Fed drop the ball with monetary policy? The U.S. went through a pandemic but is still running 7.5% inflation poised to go higher. The size of the rapid expansion of the money supply in such a short timeline with the high numbers of inflation that is anticipated to follow suggests that the answer is yes. They did. The numbers and personnel changes also indicate that the Fed is in disarray.

The downside risks of inflation should have been well explained to all sitting governors in the Fed for a vote. I’m not sure that happened. If downside risks had been well explained, we likely would not be in the situation we are today.

There is another narrative however, in that it is a Democracy and elected officials have power over policy. It could also very well be that the Trump administration interfered somewhat with the decisions within the Fed but to what extent, no one really knows.

The Fed is supposed to operate autonomously but in the same breath, the presidency appoints the governors within the Fed with Senate approval and therefore has a direct line to these appointees.

So, in theory, as a consequence of Trump appointing Richard Clarisa and Randy Quarles who’s names were mostly responsible for monetary policy within the Fed as well as modelling and presentation to the board for a vote, (no longer sitting governors as of January I might add) coupled with the rapidly increased money supply falling within the duration of Trump’s time in office, the numbers flesh out above and beyond the noise, that Trump was indeed a highly inflationary president.

In other words, the inflationary mess that the U.S. is living in right now leads right back to Trump’s presidency as the rapid expansion of the money supply numbers under Trump and the inflation that has since followed these numbers do not lie.

#168 Observer on 02.17.22 at 10:37 am

#108 Uncle Thomas on 02.16.22 at 7:45 pm
Excuse me, I feel like I’ve slipped into some kind of bazarro world. Trudeau has turned Canada into a police state with him as the absolute dictator and there is no reaction on this site. Everyone is still yammering about interest rates and house prices. This is not about science and medicine, this is about power and government control of the population. Do you not understand what has happened in Canada?

^^^^^^^^^^^^^^^^^^^^^^^^^

So tired of clueless people such as yourself.

#169 millmech on 02.17.22 at 10:37 am

#145
You did know that Russia stopped exporting fertilizer earlier this year, mainly because ammonium nitrate as that could be used as improvised IED in a war with Ukraine. it was even being discussed on WSB a while ago. I picked up NPK.TO at $5 as a position in this and have watched it grow nicely.

#170 Quintilian on 02.17.22 at 10:40 am

Shawn monetary policy is a blunt tool. It is understood that it can overshoot in both directions.

Unintended consequences, delayed and real time undetectable adverse effects, is one thing, but theft from one group of people for the benefit of others is simply immoral.

It has been obvious to anyone with the slightest rudimentary knowledge of economics that the BOC has arbitrarily chose from whom to steal from to widen the wealth gap.

Yes central bankers can be and have been evil.

#171 Protesting is only allowed on twitter on 02.17.22 at 10:42 am

Occupation, encampment, blockades and civil disobedience is not protesting. – Garth

Only on Twitter after it’s fact checked.

Right..

#172 Diamond Dog on 02.17.22 at 10:51 am

#106 willworkforpickles on 02.16.22 at 7:39 pm

Dramatically increased money supply leading to bubbles everywhere including bonds, the markets, real estate with the high valuations we’ve seen as a consequence, that’s the party phase.

But now, we’ve got 7.5% inflation and climbing that is destroying purchasing power for everyone with no cure really other than to raise rates to suck excess money out of the supply and change business/consumer behavior. This is the hangover phase as the economy slowly returns to fundamentals that steer to the downside.

I mentioned earlier that we should be prepared for double digit inflation, but we may not get there. I think we’ll peak in the 9’s somewhere (I hope) but this still devastates seniors living solely on government pensions and folks on fixed income the most. It’s not like they will get a bump in income to offset the purchasing power they’ve lost.

Inflation will effect the poor and lower middle income the most and later on as rates rise to offset, the indebted. Even if the Fed chooses moderate rate hikes, i.e. years of stagflation, we could still see a moderate to severe recession. Time will tell, but the Fed and by proxy the world is in a bad place.

#173 Sail Away on 02.17.22 at 10:52 am

#149 JoshuaFalken on 02.17.22 at 3:43 am

“Adulting is hard. Welcome.” Thanks for this, Garth. A slap in the face of all us young and middle-aged folks who’ve had their chance of ever generating wealth taken away from them.

[Cringey whiney diatribe continues]

———

A tip, JF: whining is not adulting, regardless the physical age. Only YOU can prevent forest fires. Whoops, sorry… can influence your future.

I’m 49 and life has been fantastic. My kids are early 20s and their future is bright as flaming magnesium. Many of my employees are late 20s/early 30s. Most own houses, have the things they want, seem quite upbeat and cheerful.

I will leave you with a powerful response to any and all situations in which you yourself were involved… that went horribly wrong. All soldiers learn this from day one:

‘No excuse Sgt/Sir!’

#174 Ponzius Pilatus on 02.17.22 at 10:59 am

#165 Observer on 02.17.22 at 10:28 am
SailAway’s idol, “Elon Musk waded further into the political controversy over vaccine mandates that’s gripped Canada for weeks, tweeting a meme making a satirical comparison between Prime Minister Justin Trudeau and Adolf Hitler.”

Meanwhile, rational, self-secure, empathetic people are reconsidering buying a Tesla.

https://www.bloomberg.com/news/articles/2022-02-17/musk-ratchets-up-trudeau-criticism-with-hitler-comparison-meme
————————-
Musk should be careful.
“Hitler” Trudeau may just revoke all government incentives to buy a Tesla.
As the say “ Hit them were it hurts the most. The bottom line”.
Where would Tesla be without all the subsidies world wide?

#175 TurnerNation on 02.17.22 at 11:03 am

#152 crowdedelevatorfartz on 02.17.22 at 7:25 am

Microchips are so 1980s. It’s been Nano Technology for a while now. 20 years ago on TeeVee I heard it was to make us so healthy, injected into us .

And Smart dust. I have it on good authority that this in fact used/deployed in this country. I will not say by whom.

https://en.wikipedia.org/wiki/Smartdust
Smartdust[1] is a system of many tiny microelectromechanical systems (MEMS) such as sensors, robots, or other devices, that can detect, for example, light, temperature, vibration, magnetism, or chemicals. They are usually operated on a computer network wirelessly and are distributed over some area to perform tasks, usually sensing through radio-frequency identification.

#176 Sail Away on 02.17.22 at 11:04 am

#165 Observer on 02.17.22 at 10:28 am

Meanwhile, rational, self-secure, empathetic people are reconsidering buying a Tesla.

———

Hopefully reconsidering to ‘yes’. We secure and empathetic people have as much right to the world’s greatest driving experience as those meanies.

#177 IHCTD9 on 02.17.22 at 11:08 am

#165 Observer on 02.17.22 at 10:28 am
SailAway’s idol, “Elon Musk waded further into the political controversy over vaccine mandates that’s gripped Canada for weeks, tweeting a meme making a satirical comparison between Prime Minister Justin Trudeau and Adolf Hitler.”

____

Trudeau is busy shouting across the house of commons that the truckers are “people who wave swastikas” – as if the convoy protest looks like an NSDAP rally.

If he can’t handle a return salvo, maybe he should pipe down a bit with his own BS? Trudeau even believes his own BS.

Just about everyone on the planet already thinks Trudeau has rocks in his head. One of his more reasonable back benchers should get him a muzzle because he obviously can’t control what comes out of his mouth on his own.

#178 G on 02.17.22 at 11:38 am

Hi #77 TurnerNation,
Communication is inherently complex. It needs three things, To be sent, Received, and Understood. And that’s just for computer to talk to each other.
Then add in people with differing ‘options’ and different language and bad spelling (me bad, sorry all) and it can get harder to communicate.
Hopefully we can get back to ‘the before times’ for everyone at some point relatively soon.
If interested you’ll need to find link yourself 9min, I saw it on YouTube. I’d suggest some more info links here but…
Fre…. Con…: Brian Peckford Speech – Canadian Charter Of Rights & Freedoms Feb.15 2022 IrnieNews

#179 Senator Bluto on 02.17.22 at 12:03 pm

I’m thinking of filing a Human Rights Commission complaint against the PM for hate speech. I have Jewish ancestors and I find his remarks disgusting, hateful and despicable.

Is it possible to invoke the Emergencies Act as the basis for indefinitely jailing and cutting off trust funds from the PM for spreading hate speech?

Just asking for a friend….

#180 WTF on 02.17.22 at 12:09 pm

My MP sent me (well, spammed me) a link to a questionnaire “Pre-Budget Consultations 2022”. Let ’em have it everyone.
————————————————————-
Thanks, I did, bypassed their pathetically obvious steering to their pet spending projects and faux consensus. Its clear the diminutive non finance/finance minister has an agenda for your $ that wont be deterred…

Opted for the curiously not mentioned. Tax burden, debt/deficit, government waste and spending, on top of the pandemic debacle.

Cathartic, but pointless Im sure.

Takes a special kind of stupid to forge ahead, oblivious to the future damage this will cause for years. Oh wait, they wont be around to clean up the steaming pile of financial wreckage.

You would have preferred not to be asked? – Garth

#181 Chris L. on 02.17.22 at 12:18 pm

Occupation, encampment, blockades and civil disobedience is not protesting. – Garth

_______________

Yes, this is the very definition of a protest. They have worked well when the message was “part of the official narrative.” I’m worried for anyone who wants to silence voices – especially when it is the government. When voices are stopped, there is only one measure remaining. Remember, choices have consequences.

#182 Shawn on 02.17.22 at 12:20 pm

Diamond Dog on the Fed, Bonds and Risk

#167 Diamond Dog on 02.17.22 at 10:36 am

What you wrote is basically useless and quite possibly misleading. There is no reason for anyone to trust it. I mean, I have some knowledge in this area and I don’t trust what you are saying at all. You make a lot of contentions with no evidence. Something like all the amateur immunologists we see these days.

Write that up in an actual article and run the numbers you are talking about, provide some sources for your claimed facts, and then edit it a number of times for clarity and you might have something.

#183 Neo on 02.17.22 at 12:38 pm

I will bet $5 Canadian dollars what whoever is pulling the puppet strings on the Bank of Canada will instruct the puppets running the bank of Canada to keep interest rates unchanged

Any takers?

#184 Summertime on 02.17.22 at 12:49 pm

#172 Diamond Dog on 02.17.22 at 10:51 am

‘Inflation’ aka CPI with current measurements is apparently 5 % while in reality it is more like 15 % on stuff that matters – food, energy, essential services, housing.

So these 9 % would translate to and feel more like 25 % – 30 %.

With rates at zero.

Yes, it ‘might’ go to 2 % to account for negative 13 % return as of now, but the increase will most likely stop at 1.5 % due to various ‘reasons’.

With all things being equal we need one time inflation of 250-400 % for the debt to become manageable again and we will get there one way or another.

#185 OK, Doomer on 02.17.22 at 12:52 pm

You would have preferred not to be asked? – Garth
+++++++++++++++++++++++++++++++

No one thinks that the Lib’s are actually asking for any one’s opinion. Seriously. No one.

Pretending to ask for someone’s opinion, while knowing full well that you intend to ignore it is fraud, pure and simple.

I was an MP. I asked. I tabulated all comments, presented them to ministerial colleagues and reported them to constituents. I hope you responded. Or you don’t matter. – Garth

#186 OK, Doomer on 02.17.22 at 1:02 pm

Trudeau asking for peoples opinions is not unlike what Mao did during the “Hundred Flowers Campaign” also known as the Great Blossoming during the Chinese Cultural Revolution.

Chinese citizens were encouraged to openly express their opinions of the Cultural Revolution. When Mao heard comments that he didn’t like, the people who spoke up were hauled away, never to be heard from again. Mao said they “..Blossomed the wrong way”.

Trudeau only wants to hear that he’s doing a great job and that you love him.

#187 Stephladimir Harputin on 02.17.22 at 1:02 pm

“I was an MP. I asked. I tabulated all comments, presented them to ministerial colleagues and reported them to constituents. I hope you responded. Or you don’t matter. – Garth”

————

And that’s why I punted you the hell out of MY government!

It’s not about the stupid ordinary people. It’s about me and my inner circle, Turner.

THAT’s who matters.

#188 willworkforpickles on 02.17.22 at 1:03 pm

DELETED

#189 expat on 02.17.22 at 1:06 pm

DELETED

#190 Sail Away on 02.17.22 at 1:08 pm

“I was an MP. I asked. I tabulated all comments, presented them to ministerial colleagues and reported them to constituents. I hope you responded. Or you don’t matter. – Garth”

——–

I was under the impression from your past posts, that your doing so was in large part responsible for your removal by those in charge because they did not agree with constituent-driven thoughts vs toeing the party line. Incorrect?

Does that mean you stop trying? – Garth

#191 Stone on 02.17.22 at 1:16 pm

#109 AM in MN on 02.16.22 at 7:46 pm
#37 Stone on 02.16.22 at 3:23 pm
#26 AM in MN on 02.16.22 at 2:48 pm
The pain has only started. This is going to take a decade to unwind.

Those who look down on the truckers, who think freedom is overrated and prosperity comes from a Government cheque fed by printed money from the CB, will wake up one morning wondering what happened to the country that used to value the things the truckers represent.

———

What those occupation terrorists represent is anarchy. Oh, and their own personal interests.

If everyone valued what these anarchists value, we’d live in a country full of anarchy and tyrants running the country.

Think about that instead of dreaming your silly little fantasy.

——————————————————-

You don’t understand the difference between Freedom and Anarchy. No one who is advocating for freedom is advocating for anarchy. Tyrants exist in societies with no freedom, you have it backwards.

Canada is moving ever closer to a Social Credit system, like China. The distressing part is that so many people (like you) seem to think that it would be a good thing. I bet when you look at that picture of the guy in Tienanmen Square in front of the tank, you cheer for the tank.

We are already closer than most realize. Have you crossed the border lately? Did you upload the ArriveCAN App? No need to show the QR code, they just upload your phone data from a distance. No App, no cross border.

Now they can monitor all your financial data, you have no recourse to Courts. Of course, this doesn’t matter if it’s not your bank account being closed, your business being bankrupted etc. But what if it is, and no one else cares?

Is it that hard to see the Vax passport now required for Air or Train travel being expanded, like in China to include that you’re not behind in your taxes? Wouldn’t that have majority support?

How about not having posted the wrong thoughts on social media, as the nice policewoman from the OPP reminded the woman in Ontario last week when she showed up at her house?

Many of you on the left think this “show of strength” by Jr. will make him more electable. If it is properly explained by the new CPC leader, I’m sure it won’t.

———

It’s you who doesn’t understand the difference between freedom and anarchy. First, I neither am on the left nor the right. Second, I find myself at the top of the food chain and you do not (it’s clear in your babble).

I understand the rules of the game and apply them in such a way to benefit me. You whine about it but do nothing to exploit those problems (or as I see it, opportunities).

As for big brother monitoring, let them monitor. I am boring. Most people are boring. Those of you advocating overthrowing a gouvernment or sedition and you don’t have the intelligence, power and strength to follow through on that, you get what you deserve. Just don’t be jealous that “Jr.” is far more intelligent than the rabble. I don’t consider him the greatest leader but he has enough in him to outdo these joker occupationist terrorists. Successful institutions grow, develop, and adapt over time to external pressures. Canada’s institutions seem to be doing just fine against external pressures.

#192 DON on 02.17.22 at 1:17 pm

#182 Shawn on 02.17.22 at 12:20 pm
Diamond Dog on the Fed, Bonds and Risk

#167 Diamond Dog on 02.17.22 at 10:36 am

What you wrote is basically useless and quite possibly misleading. There is no reason for anyone to trust it. I mean, I have some knowledge in this area and I don’t trust what you are saying at all. You make a lot of contentions with no evidence. Something like all the amateur immunologists we see these days.

Write that up in an actual article and run the numbers you are talking about, provide some sources for your claimed facts, and then edit it a number of times for clarity and you might have something.

**********
I take it you will do the same to back up your arguments as well?

#193 Ponzius Pilatus on 02.17.22 at 1:26 pm

#179 Senator Bluto on 02.17.22 at 12:03 pm
I’m thinking of filing a Human Rights Commission complaint against the PM for hate speech. I have Jewish ancestors and I find his remarks disgusting, hateful and despicable.

Is it possible to invoke the Emergencies Act as the basis for indefinitely jailing and cutting off trust funds from the PM for spreading hate speech?

Just asking for a friend….
———————-
If you believe in the Bible, we all have Jewish ancestors.

#194 Canadian Patriot on 02.17.22 at 1:39 pm

@#164 Sail Away on 02.17.22 at 9:56 am
#161 Canadian Patriot on 02.17.22 at 8:57 am

MMmmmmm, chick-fil-a.
food of the gods, truckers and conservatives.

———

Cracker Barrel breakfast, Chick-Fil-A lunch. Man oh man. My people.


I’d have breakfast there every damn day if it weren’t for me hart condition.

#195 Tinpot Economist on 02.17.22 at 1:43 pm

#182 Shawn on 02.17.22 at 12:20 pm

I wholeheartedly agree. He is a Federal Reserve conspiracy crank, along with maybe Andrew Scheer who wants the BofC to open up its books.

The CPC is on verge of being full of lunatics. IMHO

#196 expat on 02.17.22 at 1:44 pm

DELETED

#197 willworkforpickles on 02.17.22 at 1:51 pm

#167 Diamond Dog

“In other words, the inflationary mess that the U.S. is living in right now leads right back to Trump’s presidency as the rapid expansion of the money supply numbers under Trump and the inflation that has since followed these numbers do not lie.”
……………………………………………………………………………………………

The fallout inflation from Fed monetary policy 6 to 8 quarters back is now working its way through the system and is all Trump era currently. And will be for several more months yet. The Biden era excess, to come later on, hasn’t begun to bite.
As monetary policy guages forward inflationary projection…there’s lots more to come.

#198 Sail Away on 02.17.22 at 2:05 pm

#190 Sail Away on 02.17.22 at 1:08 pm

“I was an MP. I asked. I tabulated all comments, presented them to ministerial colleagues and reported them to constituents. I hope you responded. Or you don’t matter. – Garth”

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I was under the impression from your past posts, that your doing so was in large part responsible for your removal by those in charge because they did not agree with constituent-driven thoughts vs toeing the party line. Incorrect?

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Does that mean you stop trying? – Garth

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In many cases, yes, because losing the position also means losing the ability to influence decisions from that point forward. Not many are willing to die on the hill and will instead quietly shelve unpopular responses, hence the general feeling that the polling surveys aren’t worth the time.

Who knows? You might even gaun unwanted attention by saying something unacceptable.

#199 Tinpot Economist on 02.17.22 at 2:11 pm

#169 millmech on 02.17.22 at 10:37 am

You did know that Russia stopped exporting fertilizer earlier this year, mainly because ammonium nitrate as that could be used as improvised IED in a war with Ukraine. it was even being discussed on WSB a while ago. I picked up NPK.TO at $5 as a position in this and have watched it grow nicely.

************************************************************************

No, I did not know that. Makes sense as alot of Belarusian potash is/was shipped through Ukraine. So, this is another sign of impending attack…maybe.

#200 Søren Angst on 02.18.22 at 5:35 am

And God ⚡ sayeth to Faron

Thou shalt not write ✍ False Comments Before Me

To muck up 🚽 my Comments section

Lest yea wisheth to end up in 🔥 👿 💀

Have a nice day 🖕
XOXO
💋

#201 Diamond Dog on 02.18.22 at 11:48 am

#197 willworkforpickles on 02.17.22 at 1:51 pm

Biden era stimulus out in Feb of 2021 has mostly already been spent. We see these numbers in savings and retail spending, it’s mostly gone. The Biden administration hasn’t had the ability to introduce new spending since with build back better stalled. Most new spending outside of the trillion dollar giveaway engineered in Feb was lumped up in this bill.

#202 Diamond Dog on 02.18.22 at 5:13 pm

#182 Shawn on 02.17.22 at 12:20 pm

m0 is used world wide as an indicator (one of many) to watch in predicting Fiat currency risk (under the assumption of accurate fresh data). Most nations that have an m0 chart like the U.S. would have in expectation a potential currency crisis on their hands but m0 can’t be used as a stand alone source of information to predict this as I’ve painstakingly stated. The U.S. has for example added 9 trillion to the balance sheet on bond buy backs alone over the last couple years which can be sold off so it’s not cut and dried. (just a bit more math)

What an m0 chart does do when we see a doubling of the m0 money supply occur such as the U.S. has undergone, is raise flags that warrant further investigation when a nation takes on the kind of dramatic increase in the money supply the way the U.S. has post pandemic.

World wide, Fiat currencies are an ugly garden party due to the pandemic. If there’s anything saving the U.S. from bad karma due to an rapidly increased money supply, its the simple fact that most other nations have gone through the same experience albeit, perhaps not so extreme.

What I’m saying if you are at all confused (which I think is often btw), is that Fed policy and by proxy political policy, is vulnerable to criticism as a result of monetary policy and political policy (Washington is the Fed’s overlord after all) as a direct consequence of the money supply having gone through such a rapid expansion. It shouldn’t matter the political stripe here, the damage is done. What matters solely is cause and effect and where we go from here.

The consequence of high inflation and a worsened fiscal picture opens the door wide to criticisms that lead back to the Trump administration. If high inflation couples up with a devaluing dollar, the economic picture of the U.S. will turn from bad (recession) to ugly.

There’s a timeline to it. That timeline is always up for debate, but cause (rapid increase of the money supply) and effect (inflation and all that follows, presumably aggressive rate hikes and recession or worse with stagflation if they moderately raise rates since that’s a multi year scenario or hyperinflation ultimately if they do nothing which is a disaster, lets pray they won’t choose disaster) unfortunately, is not.

There is strong empirical evidence linking a rapidly increased money supply to high inflation. There is also strong empirical evidence linking an elected government (Trump administration in this case, but the world over is littered with politicians who have done the same) to promoting a rapidly increased money supply to get re-elected and/or enrich itself through the wealth effect, however brief, the masses enjoy before inflation hits.

By now, once again the timeline is up for debate, but one should know what follows high inflation i.e. higher rates if the Fed knows what’s good for the economy by addressing inflation, followed by recession, a necessary consequence now. It will get worse if the Fed does nothing or chooses to moderately raise rates during high inflation (a long period of stagflation).