Markets Party Like the 1920's with an Economy of the 1930's

[Quadtrack]

What general area are you at?

North of Saskatoon

I think we will hit the same GDP/Debt wall we did when Paul Martin had to take drastic steps. Probably within 2021. Govt debt will continue to pile on next year, and GDP will shrink. Current finance minister has no clue.
If that happens, devaluing CND will not be enough to rescue the economy with oil industry under siege by this govt. things will spiral downward and interest rates will need to rise to try and stem the bleeding. Some very dark days ahead in Canazuala.

[Sodbuster]

Biggest difference is that today’s prime interest rate is less than 2% versus over 8% when Paul Martin was finance minister. Still no excuse to spend like a drunken sailor and it will catch up with them soon. One of the biggest reasons for stock market going up is there aren’t many alternatives to make money with current interest and bond markets near 0%, I will welcome the day when interest rates start and stock market to get back to normal valuations.

[ajl]

Biggest difference is that today’s prime interest rate is less than 2% versus over 8% when Paul Martin was finance minister. Still no excuse to spend like a drunken sailor and it will catch up with them soon. One of the biggest reasons for stock market going up is there aren’t many alternatives to make money with current interest and bond markets near 0%, I will welcome the day when interest rates start and stock market to get back to normal valuations.

Interest rates this low also makes real estate prices this high. Are you ready for the day in which your real estate is at 1/3 of today's price? Canuckistan has an overgrown finance industry which would be in a tail spin if real estate values ever slumped so that is one of the major reasons for all this money printing.

[jazz]

Trudeau was already adding massive debt before covid was even on the radar screen. Curve doesn't look much different before or after. Added $200B before covid and $400B since? WTF? Am I reading this right?

Where is the rest coming from? where is it going to? errol? AE?

[farming101]

225B in G of C bonds is sitting on the inflated B of C balance sheet
Yellow line is bonds. Pink line is Payments Canada liabilities

[Sodbuster]

Interest rates this low also makes real estate prices this high. Are you ready for the day in which your real estate is at 1/3 of today's price? Canuckistan has an overgrown finance industry which would be in a tail spin if real estate values ever slumped so that is one of the major reasons for all this money printing.

Absolutely, I’d like to see the banks prime rate to be around 5%-6%. This would make buyers a little more cautious when buying and would also give people a little more security for their saving instead of being at the mercy of the stock market. The housing and land market is just nuts right now, lower prices would be a good thing.

[jazz]

225B in G of C bonds is sitting on the inflated B of C balance sheet
Yellow line is bonds. Pink line is Payments Canada liabilities

When the government is the buyer of last report for its own debt, then we have a major problem.

As I said before, who will BoC unload that debt to? Do any canadians have money to buy bonds with and who would buy ours? Guess we can ask china to take them on but they wont be happy with a 1% yield either.

[Austrian Economics]

Absolutely, I’d like to see the banks prime rate to be around 5%-6%. This would make buyers a little more cautious when buying and would also give people a little more security for their saving instead of being at the mercy of the stock market. The housing and land market is just nuts right now, lower prices would be a good thing.

Our fiat currency system could not withstand bank rates at 5% to 6%. The banking system would literally implode and take most companies with it the moment their loans came up for reset.

I totally agree that asset prices are nuts, but raising rates within a fiat system will not fix that.

Re an earlier point about how Chretien and Martin righted the financial ship in the 90s, the biggest factor allowing them to do that was the progressive collapse in interest rates. As bonds came due, debt could be refinanced at lower and lower rates. But since interest rates in fiat cannot achieve a low but stable rate, rates must now continue to fall into negative territory.

[errolanderson]

The total disconnect between the stock market and economic reality is tied to out of control gov’t spending forcing discount rates to keep the gig alive. When will equities be forced to reflect reality? That clock is still ticking . . . .

There is now a mounting inflationary fear amoungst investors providing the stock market rally holds. Covid distribution disruptions have fanned-the-fans. But should 2021 be the year of-the-correction, inflation could again bow to mass deflation. Consumer demand is the ultimate king.

And the market fails to mention the massive risks in the derivative market. The elephant-in-the-room . . . .

The impact of Covid will last for years. Investors are now paying down debt and saving more. Even if Covid magically disappears, the days of living on the edge with investor debt have changed (IMO). Just like our parents and grandparents impacted by the dirty 30’s have been frugal all their life.

Investors that believe that the Federal Reserve have forever got-their-back with unlimited money printing are sorely mistaken (IMO). The economic power shift has clearly shifted toward Asia in-my-view.

[VK58]

The total disconnect between the stock market and economic reality is tied to out of control gov’t spending forcing discount rates to keep the gig alive. When will equities be forced to reflect reality? That clock is still ticking . . . .

There is now a mounting inflationary fear amoungst investors providing the stock market rally holds. Covid distribution disruptions have fanned-the-fans. But should 2021 be the year of-the-correction, inflation could again bow to mass deflation. Consumer demand is the ultimate king.

And the market fails to mention the massive risks in the derivative market. The elephant-in-the-room . . . .

The impact of Covid will last for years. Investors are now paying down debt and saving more. Even if Covid magically disappears, the days of living on the edge with investor debt have changed (IMO). Just like our parents and grandparents impacted by the dirty 30’s have been frugal all their life.

Investors that believe that the Federal Reserve have forever got-their-back with unlimited money printing are sorely mistaken (IMO). The economic power shift has clearly shifted toward Asia in-my-view.

And that might have been the desired outcome, I mean if you have your tinfoil hat turned just the right way, you might see it that way.

[GDR]

The impact of Covid will last for years. Investors are now paying down debt and saving more. Even if Covid magically disappears, the days of living on the edge with investor debt have changed (IMO). Just like our parents and grandparents impacted by the dirty 30’s have been frugal all their life.

Really? I would hope so but I doubt it. I think society needs a reality check and covid could and should have done it but I sure havent seen it. Travel trailers, quads, snowmobiles, puppies, vehicles all have went stupid high as people are looking for ways to blow their wad on anything they can still enjoy. Perhaps the story is different for lower income households but the avg Joe seems to be spending.

[FarmJunkie]

That’s exactly what I’m seeing GDR. Who with a working brain takes a stimulus cheque and blows it on a TV instead of saving it for more important things. Like food or clothing. People are dumb and u can’t fix that til things get so bad that they are shocked into what’s important. Our grandparents lived it so they know. Since the last World War all most all of us have not known hardships like they faced. In my opinion all the gains we have made in humanity have been ruined by those in charge of our economics and finances. I blame it on the baby boomers who set up the current system only to change the rules as they went along to suit their financial gains. Essentially they are/have ruined our society for their retirement party. Pisses me off when my mother complains that she has to pay tax on her retirement plans. They expect everything for nothing sometimes. That’s why we are where we are. What has it taught us? Keep changing the rules til we are backed into the corner we are in now.