Central Bank Asset Growth

[macdon02]

I don't think that a move to a digital currency really affects much, and I doubt that the central banks really care if you use paper money or not. Any business beyond a mom and pop enterprise cannot function transacting solely in cash.

I definitely agree that negative rates are on the way. As a fiat currency collapses under the dead weight of debt that cannot be repaid, rates have to go lower and lower just to provide relief for debtors. Whether the "solution" is perpetual bonds or MMT, these ideas are just a way to put lipstick on the pig of widespread default.

Agree it's not a huge deal but how do you store wealth in a negative rate environment? You sure don't want "dollars" that the bank strips a percentage of, monthly.

[macdon02]

The entire paradox of negative rates means the boomer generation of farmers better rethink "having an auction sale" as a means of getting out, imo. Now we need a safe place to store that asset, previously bonds. Things are going to be drastically different than what most had planned. I can't see any scenario unfolding that doesn't drive land prices higher yet. Cheap money, depreciating currency which is "taxed for holding" plus in case you guys haven't noticed, wheat and soybean prices are breaking out on a long term trend.

[macdon02]

There's a 15 month lag correlation in gold/ corn prices. Shit is gonna get real and in my opinion it's entirely droughtbased. Forward pricing next year's crop in this environment can be fatal

[burnt]

So, can there be such a thing as a painless default by either of these means?

By painless, I mean not resulting in mass chaos, obviously it is not painless to anyone trying to be financially responsible.

Are we correct in assuming that preventing mass default is the objective?

Remember, we need to adopt the new way of thinking.

And it ain't the old way of thinking or anything near it.

"From each according to his ability, to each according to his need."

Highly doubtful that it will be voluntary.

Waiting for the answer - what is a safe haven for assets?

[jazz]

The entire paradox of negative rates means the boomer generation of farmers better rethink "having an auction sale" as a means of getting out,

land or gold macdon, there is really no place else to be. Both are as store of wealth but only one would benefit from a negative rate environment IMO.

Effective negative rates are already here. bank rates less CPI is already negative.

[jazz]

Errol has been warning of this for years ... he must be a flatearther conspiracy theorist as well

Other nations and CBs have balance sheets that are manageable still. As you can see, none of them went parabolic before even in the great recession 10 yrs ago.

What Canada has done here is just unbelievable.

Canada will be the first one to feel the reckoning.

[chuckChuck]

We live in Canada , not the US .... for the thousandth time

Furrow, so what happens in the US doesn't affect Canada? LOL We are tied to their economy like no other economy.

Conservative premiers want more help. Steven Harper used stimulus and bailouts during the 2008/2009 financial crisis. Trump is using stimulus now in a very big way.

So why are posters only concerned about Trudeau's debt increase and deficit financing for stimulus and not Trump's? Why the double standard because they both could put us in peril down the road?

[Rareearth]

So if the biggest corps are buying back shares ( and going to cash) vs reinvesting in the company, or merger acquisitions isn’t this counter intuitive to borrowing more even if interest rates are negative?

[furrowtickler]

Furrow, so what happens in the US doesn't affect Canada? LOL We are tied to their economy like no other economy.

Conservative premiers want more help. Steven Harper used stimulus and bailouts during the 2008/2009 financial crisis. Trump is using stimulus now in a very big way.

So why are posters only concerned about Trudeau's debt increase and deficit financing for stimulus and not Trump's? Why the double standard because they both could put us in peril down the road?

Yup the is a string connection, has been for 100 years . Yup US in a heap of trouble that obvious
Will you admit Canada is in grave danger under this current government?

[chuckChuck]

What would a Conservative government done differently?

[jazz]

So why are posters only concerned about Trudeau's debt increase and deficit financing for stimulus and not Trump's? Why the double standard because they both could put us in peril down the road?

Some news for you chuck, our trade based economies are interconnected, our currencies, bond markets and debt are not.

They will be insulated due to reserve currency status. A 1% rise in their GDP will not offset the stupidity exhibited by our current govt.

A conservatives govt would be down there strengthen our links to that economy and getting people out of their basement and back to work. 6 more months of lockdown and CERB will finish small businesses in this country.

And no money for solar panels.

[chuckChuck]

Some news for you chuck, our trade based economies are interconnected, our currencies, bond markets and debt are not.

They will be insulated due to reserve currency status. A 1% rise in their GDP will not offset the stupidity exhibited by our current govt.

A conservatives govt would be down there strengthen our links to that economy and getting people out of their basement and back to work. 6 more months of lockdown and CERB will finish small businesses in this country.

And no money for solar panels.

So what happens to the US Currency, bond market and debt has no impact in Canada? I think most people would disagree.

Some sectors of the Canadian economy are back some are not. An unmitigated Covid out break will also shut dow the economy and result in a lot of pain and deaths. I don’t know any government in Canada that says we should do nothing and let it run it’s course. Ontario and Quebec are struggling to contain the damage.

[furrowtickler]

What would a Conservative government done differently?

Not relevant really , they not in power .
Like asking what would have the NDP do different .... does not really matter .

Will also leave this discussion here to those brining value to it .
You and I don’t need to ruin this thread .
Some very astute posts here to read

[ajl]

Hyper inflation is not a given either. Look at Japan. It is the king of printing its currency in the hopes of igniting inflation, and yet is has not materialized. One reason given is that Japan's elderly population saves more money every time the government is on a printing binge because they fear inflation and figure they need extra resources to combat it slowing down velocity and muting any inflation. Another factor is that snowballing debt loads creates a demand for currency in order to repay debt. Every loan will have to be renegotiated in the entire world and the new loan is larger than the old as there is no demand for production and everybody is going to have to refinance.

[Austrian Economics]

Agree it's not a huge deal but how do you store wealth in a negative rate environment? You sure don't want "dollars" that the bank strips a percentage of, monthly.

You can store wealth with negative interest, but as a creditor your store of wealth leaks a bit every month. An alternative like gold gets rid of counterparty risk, but right now gold does not circulate in the credit system. Everyone wants to buy gold, but almost no one is willing to trade it for another good or commodity. That has to change to get us out of this mess.

Regarding a couple of others points, default is always painful.

If you think farmland prices are high now, just wait. Once we get to negative rates, those values will go near-vertical. Equity and real estate prices function as the inverse of interest rates.