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

[beaverdam]

Since most pensions either invest or are required to invest in fixed income, how does zero percent interest protect a pension plan?

I was speaking of equities held in pensions.

So some are forecasting neg interest rates, at some point that should trigger an economic collapse,,, then what?

Back to some historical normal like 3-6%

or continued low interest or some level of neg, to spur industry?

sky high interest like the 80's, to encourage saving?

the Great Reset will give 75% of the population a Basic Income, no need to save or invest???

[burnt]

Aren't governments and central banks keeping the equities stable/rising to protect the avg Joe&Jane 6-pack's IRA and RSP and their corporate pension???
The ultra rich are benefitting from government actions to avoid a crash, that would wipe out 70% of the citizens.

DING!! "What is fascism?"

[errolanderson]

The MSM narrative of the deflationary boogeyman is equivalent of the Covid 19 boogeyman. Neither have any teeth. What we have is the 'crack up boom' facilitated by monetary expansion. It's equivalent to the ancient alchemaic pursuit to turn lead into gold, in modern day its the goal of turning freshly printed paper into prosperity. All attempts of the fiat monetary experiment fail miserably. The modern monetary theory that countries are embarking upon IS inflation on steroids, price inflation lags but always follows.

biglentil . . . always enjoy your comments . . . my two-bits . . . .

Covid and the deflationary boogeyman both have a serious bite. This will be a changed world. There are serious deflationary pressures coming down-the-pipe in some sectors despite bloated money-printing . . . along with serious inflation in some sectors. In other words . . . winners and losers in the business world.

Economics at-its-most bizarre. Nothing hangs together . . . .

[errolanderson]

Here's a market comparison of price changes from December 30, 2019 to December 30, 2020.

The Winners . . . .

Bitcoin . . . . . . . . . . . . . up 400%
Soybeans . . . . . . . . . . . up 37%
Kansas City Wheat . . . . up 36%
Canola . . . . . . . . . . . . . up 32%
Minneapolis spring wheat up 24%
Gold . . . . . . . . . . . . . . up 24%
Corn . . . . . . . . . . . . . . up 21%
CME Oats . . . . . . . . . . . up 19%
Soyoil . . . . . . . . . . . . . up 17%
Natural Gas . . . . . . . . . up 10%
Dow Jones . . . . . . . . . . up 7%
Toronto TSX Index . . . . . up 3%
Spot Cdn Dollar . . . . . . . up 2%


The Losers . . . .

Crude Oil . . . . . . . . . . . down 33%
Live Cattle . . . . . . . . . . down 9%
U.S. Dollar . . . . . . . . . . down 7%
Lean Hogs . . . . . . . . . . down 6%
Feeder Cattle . . . . . . . . down 3%

[jazz]

Cant really read your chart BL. I am pretty interested in the content. Maybe you cna piece it up or something.

Just a reminder back in the 90s, if anyone remembers when our debt to gdp was 66%, Canada was a few quarters away from a default. The only difference then is we actually had some responsible grown ups in the govt who jumped into action immediately and got it under control pretty quick.

back then they did some pretty draconian things to rescue the economy. GST raised and raided the EI fund and drastic spending cutbacks.

But at the same time the chretian govt did a big infrastructure program that wasnt sustainable bike paths in Ottawa. They gave funds to municipalities to upgrade water and waste water infrastructure and major highways work. Thats how you bring an economy out.

I see none of that on the horizon now. EI fund will be empty. And with consumer inflation stalking the land a rise in GST will have the opposite outcome. Spending cutbacks?

[canolacrazy]

Here's a market comparison of price changes from December 30, 2019 to December 30, 2020.

The Winners . . . .

Bitcoin . . . . . . . . . . . . . up 400%
Soybeans . . . . . . . . . . . up 37%
Kansas City Wheat . . . . up 36%
Canola . . . . . . . . . . . . . up 32%
Minneapolis spring wheat up 24%
Gold . . . . . . . . . . . . . . up 24%
Corn . . . . . . . . . . . . . . up 21%
CME Oats . . . . . . . . . . . up 19%
Soyoil . . . . . . . . . . . . . up 17%
Natural Gas . . . . . . . . . up 10%
Dow Jones . . . . . . . . . . up 7%
Toronto TSX Index . . . . . up 3%
Spot Cdn Dollar . . . . . . . up 2%


The Losers . . . .

Crude Oil . . . . . . . . . . . down 33%
Live Cattle . . . . . . . . . . down 9%
U.S. Dollar . . . . . . . . . . down 7%
Lean Hogs . . . . . . . . . . down 6%
Feeder Cattle . . . . . . . . down 3%

The question that has to be asked here, that no one is talking about. Why is bitcoin the best investment in the last year? By far. there is no faith in fiat currency anymore. some of north america's largest companies are converting their balance sheets to crypto, and not just bitcoin. Crypto currencies are just a fraction of the stock and bond markets at this time. this time next year those who are purchasing bitcoin today will probably be sitting on a big capital gain. i've got december 30 2021 marked down to compare to today's price of over $28,000 u.s.

[beaverdam]

The question that has to be asked here, that no one is talking about. Why is bitcoin the best investment in the last year? By far. there is no faith in fiat currency anymore. some of north america's largest companies are converting their balance sheets to crypto, and not just bitcoin. Crypto currencies are just a fraction of the stock and bond markets at this time. this time next year those who are purchasing bitcoin today will probably be sitting on a big capital gain. i've got december 30 2021 marked down to compare to today's price of over $28,000 u.s.

$36,828.55 CAD

https://www.coinbase.com/price/bitcoin https://www.coinbase.com/price/bitcoin

In CAD, above chart can be changed for time line.

-

Below, chart can be changed for time line or currency.

https://www.coindesk.com/price/bitcoin https://www.coindesk.com/price/bitcoin

[Quadtrack]

Look at the mandates for pension funds, mainly pensions for government workers. It's common for them to have a legal requirement for significant portions of their portfolios to be invested in government debt. The interest on that is effectively zero now.

Rent is following interest rates as a proportion of land value. In other words, land values are appreciating at a far faster rate than rent, as is generally the case. These pension funds typically have to flip the land after a few years for a capital gain which the pension fund then doles out to retirees to be consumed. None of this is sustainable.

Farmland cash rent has been 3.5% of purchase price here for at least 15 years. Still is right now.

[beaverdam]

Farmland cash rent has been 3.5% of purchase price here for at least 15 years. Still is right now.

What general area are you at?

[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.