National Economy

[Truenorth00]

This thread is so pointless. It's one person publicly self-fellating on how much of a genius he is..... For following lots of well known economic commentators. Almost nothing in here is actually discussing the Canadian economy anymore.

[Build.It]

In what universe does official data on Canadian unemployment, Canadian yield rates, Canadian national debt, and certain factors down south that will affect Canada's economy, have "nothing to do with the Canadian economy"?

[YOWetal]

Originally Posted by GreaterMontréal

The inflation was not created because they gave people free money. The inflation was caused because the supply chain stopped suddenly and people had money to buy things all at the same time. This resulted in a rarity in almost everything.

Well it's certainly a bit of both and other factors. It's impossible to know conclusively. The idea people who got the free money are worse off is the biggest fiction of the whole thing.

Originally Posted by suburbanite

A balanced budget isn't going to result in a reduction of the existing debt. Unless either country somehow generates a substantial surplus through unprecedented austerity, the debt is going to be refinanced at higher rates if long-term yields rise.

Yes but if we get near balance and we have growth that will become more and more manageable not less.

[acottawa]

Originally Posted by YOWetal

Well it's certainly a bit of both and other factors. It's impossible to know conclusively. The idea people who got the free money are worse off is the biggest fiction of the whole thing.

I think most of the people who got free money are worse off. Any free money they gained was eaten by inflation, particularly for food, rent, etc.

[1overcosc]

Originally Posted by Build.It

Eh don't say I didn't warn you.

But for the record, the COVID response (and prior QE) is what caused the upcoming recession.

If the governments allowed businesses to fail in the GFC and didn't force people to shut their businesses down during COVID we wouldn't be as deeply indebted right now and income inequality wouldn't be as severe.

This is something the left is so clueless about.

Stimulative spending drives asset inflation, which makes the rich richer. They complain about "capitalism" as the generic source of all evils ignoring that it's the socialist-ish economics they love that is causing this problem.

[1overcosc]

Originally Posted by acottawa

I think most of the people who got free money are worse off. Any free money they gained was eaten by inflation, particularly for food, rent, etc.

Free money is definitely bad. Not only does it drive debts/deficit and thus inflation, it also drives up asset inequality, and it creates economic inefficiencies and market distortions because it directs the flows of money based on government policies instead of market economics. When handouts and subsidies are bigger sources of business income than actual business, it incentivizes businesses to run themselves according to whatever gets them the most government money, not to run themselves according to whatever makes the most economic sense. It creates an inefficient "state-driven" economy. This is a big part of our productivity problem in Canada, economic growth is now driven primarily by the public sector and by government grants and not by the free market.

[Loco101]

Originally Posted by 1overcosc

This is something the left is so clueless about.

Stimulative spending drives asset inflation, which makes the rich richer. They complain about "capitalism" as the generic source of all evils ignoring that it's the socialist-ish economics they love that is causing this problem.

"The left" ?!?!

Many right-leaning governments did the exact same thing. Doug Ford is a good example.

[Loco101]

Originally Posted by 1overcosc

Free money is definitely bad. Not only does it drive debts/deficit and thus inflation, it also drives up asset inequality, and it creates economic inefficiencies and market distortions because it directs the flows of money based on government policies instead of market economics. When handouts and subsidies are bigger sources of business income than actual business, it incentivizes businesses to run themselves according to whatever gets them the most government money, not to run themselves according to whatever makes the most economic sense. It creates an inefficient "state-driven" economy. This is a big part of our productivity problem in Canada, economic growth is now driven primarily by the public sector and by government grants and not by the free market.

That happens in SO many countries including Canada and the United States. Corporate welfare and bailouts cost all of us a lot. The thing is that sometimes they do prevent mass layoffs, bankruptcies and poverty that end up costing even more.

[Build.It]

Originally Posted by Truenorth00

This thread is so pointless. It's one person publicly self-fellating on how much of a genius he is..... For following lots of well known economic commentators. Almost nothing in here is actually discussing the Canadian economy anymore.

[ZTrade]

Originally Posted by Build.It

In what universe does official data on Canadian unemployment, Canadian yield rates, Canadian national debt, and certain factors down south that will affect Canada's economy, have "nothing to do with the Canadian economy"?

You posted relevant data and your theory is plausible in my opinion. Keep sharing.

[1overcosc]

Originally Posted by Loco101

"The left" ?!?!

Many right-leaning governments did the exact same thing. Doug Ford is a good example.

Touche. Right wing governments these days are pretty interventionist too.

[Build.It]

Doug Ford is centrist.

[YOWetal]

Originally Posted by acottawa

I think most of the people who got free money are worse off. Any free money they gained was eaten by inflation, particularly for food, rent, etc.

Well a lot of people got a lot more money than inflation is a percentage of their income but even so very little of the overall inflation is because of this money given away. Let's ignore that. You think someone getting $10000 a year in CCB and $2000 a year in dental benefits is going to see inflation disappear when these are cut? That's obviously not true. Those of us benefiting through inflation falling is even dubious if slightly more credible.

[WarrenC12]

Originally Posted by Build.It

Eh don't say I didn't warn you.

But for the record, the COVID response (and prior QE) is what caused the upcoming recession.

If the governments allowed businesses to fail in the GFC and didn't force people to shut their businesses down during COVID we wouldn't be as deeply indebted right now and income inequality wouldn't be as severe.

You can fantasize all you want. If there was no COVID relief from government we'd have a Great Depression level event with massive individual suffering. Of course income inequality would skyrocket, it always increases in tough economic times. Those that still have money buy up assets for pennies on the dollar.

[Drybrain]

Originally Posted by Build.It

Eh don't say I didn't warn you.

But for the record, the COVID response (and prior QE) is what caused the upcoming recession.

If the governments allowed businesses to fail in the GFC and didn't force people to shut their businesses down during COVID we wouldn't be as deeply indebted right now and income inequality wouldn't be as severe.

It's entirely reasonable to say that business closures and some other public-health measures went on too long, and too much money was doled out. But if nothing had been done, far more people would have died--the memory-holing of how serious COVID's first waves were is really incredible.

And no, if we experience a recession over the next year, it will not be singularly caused by economic policy nearly a half decade old at this point--particularly given that the intervening years have seen low unemployment and rising wages, albeit offset by inflation (a global phenonmenon and not the fault of the federal government or the Bank of Canada, which walked a delicate balance).

If we experience a recession in 2025 it will likely be due to the economy-shrinking, inflation-spiking effects of Trump tariffs and volatility in the U.S.

[kwoldtimer]

Originally Posted by Drybrain

It's entirely reasonable to say that business closures and some other public-health measures went on too long, and too much money was doled out. But if nothing had been done, far more people would have died--the memory-holing of how serious COVID's first waves were is really incredible.

And no, if we experience a recession over the next year, it will not be singularly caused by economic policy nearly a half decade old at this point--particularly given that the intervening years have seen low unemployment and rising wages, albeit offset by inflation (a global phenonmenon and not the fault of the federal government or the Bank of Canada, which walked a delicate balance).

If we experience a recession in 2025 it will likely be due to the economy-shrinking, inflation-spiking effects of Trump tariffs and volatility in the U.S.

You forgot to include ", with hindsight," after the bolded bit.

[MolsonExport]

some people just don't want to do their part (e.g., the Karen Konvoy).

[Build.It]

Originally Posted by Drybrain

It's entirely reasonable to say that business closures and some other public-health measures went on too long, and too much money was doled out. But if nothing had been done, far more people would have died--the memory-holing of how serious COVID's first waves were is really incredible.

And no, if we experience a recession over the next year, it will not be singularly caused by economic policy nearly a half decade old at this point--particularly given that the intervening years have seen low unemployment and rising wages, albeit offset by inflation (a global phenonmenon and not the fault of the federal government or the Bank of Canada, which walked a delicate balance).

If we experience a recession in 2025 it will likely be due to the economy-shrinking, inflation-spiking effects of Trump tariffs and volatility in the U.S.

Covid relief = tons of money printing which got spent into the economy, ended up in owners hands and ended up piling into houses, the stock market and other risky investments. And alot of it just ended up in peoples' bank accounts and was used to buy — at Walmart which drove up prices.

Covid ultra-low interest rates = incentivized oodles of risky lending, people buying Corollas for $60K, borrowing money to throw in the stock market, buying houses they wouldnt otherwise be able to afford, companies borrowing money to hire willy-nilly

Ultra low interest rates + relief = drove up demand at the same time supply decreased, which caused inflation. When supply chains eventually recovered, the prices stuck around and forced central banks to admit inflation was not transitory but here to stay.

This forced central banks to hike interest rates to levels not seen since 2006 while households, businesses and the government had debt levels not seen since the 1920s.

These high rates have now been baked into the economy for 2.5 years, and overleveraged homeowners are being forced to sell their houses (leading to the already experienced ~20% drop), businesses to layoff unproductive workers (unemployment is already up by 2 basis points, and basically no one is hiring right now).

Now the market is not convinced there won't be more inflation in the future which is why 10 year yields are going up despite central banks cutting rates. This is going to force governments to either refinance at higher rates (Canadian feds are already spending 12% of budget on interest payments, and this is on track to double if they don't balance the budget), or cut costs.

I'm sorry to burst your bubble, but there's no such thing as a free lunch, and dumb decisions do have consequences.

[Build.It]

Originally Posted by MolsonExport

some people just don't want to do their part (e.g., the Karen Konvoy).

Is that directed at me?

[Build.It]

Originally Posted by WarrenC12

You can fantasize all you want. If there was no COVID relief from government we'd have a Great Depression level event with massive individual suffering. Of course income inequality would skyrocket, it always increases in tough economic times. Those that still have money buy up assets for pennies on the dollar.

Except Sweden (no mandates) and Switzerland (minimal stimulus) turned out fine, so...