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

[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.

[canolacrazy]

buy bitcoin now!

if you had bought it last week when this thread started, you would be up $6800 CDN right now.

i feel that with the inflation that is coming over the next few months, we are going to see all commodities take off. Gold, Silver, canola, pulses. you ain't seen nothin' yet.

[biglentil]

buy bitcoin now!

if you had bought it last week when this thread started, you would be up $6800 CDN right now.

i feel that with the inflation that is coming over the next few months, we are going to see all commodities take off. Gold, Silver, canola, pulses. you ain't seen nothin' yet.

Bitcoin has gone completely parabolic and sentiment is sky high. No thanks modern day tulips maybe slightly better than $, the sheep are being led over the cliff.

[farming101]

3 things come to mind based on biglentil's attached graphic:

Why will Canada default?
Why will those who hold Canadian denominated debt suddenly lose faith that they can redeem it and what will they exchange that debt for?
Just why is the CAD rising against the USD?

Well, those are good questions there,yes sir,......I'll get back to you on that....

[canolacrazy]

3 things come to mind based on biglentil's attached graphic:

Why will Canada default?
Why will those who hold Canadian denominated debt suddenly lose faith that they can redeem it and what will they exchange that debt for?
Just why is the CAD rising against the USD?

for answers to these questions, check out Kirian Van Hest on you tube regarding the Canadian dollar and upcoming inflation. Farmers should be in good shape to weather the upcoming storm as our commodities are going to rise significantly. buy even a little bitcoin, buy some gold or silver, book fuel now, and don't sign any deferred contracts. we'll check back on these predictions this summer.

[LEP]

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.

Don't blame the baby boomers. I doubt there are any or many in Trudeau's cabinet old enough to be boomers. He has double the debt in less than 12 months.

[biglentil]

for answers to these questions, check out Kirian Van Hest on you tube regarding the Canadian dollar and upcoming inflation. Farmers should be in good shape to weather the upcoming storm as our commodities are going to rise significantly. buy even a little bitcoin, buy some gold or silver, book fuel now, and don't sign any deferred contracts. we'll check back on these predictions this summer.

Yes that is Kirian Van Hest's chart and he explains himself well in this video: https://m.youtube.com/watch?v=7o8JfFbvfD8 . He's an interesting fellow from Israel that has 'gamified' economics to arrive at the end game using a combination of economic history, Austrian economic theory and simulations in MMO games(Massively Multiplayer Online games). Some of the mmo's have developed complex economies with auctions and virtual property with real world value. Hyperinflation happens often in the mmo games with time and an increase in player base. Game developers much like central banks struggle to keep the monetary system stable and sound. Btw he is not a fan of Bitcoin canolacrazy and neither am I. I think the take away from his chart is Canada is the only nation to have a worsening 5yr CDS (credit default swaps) in the past 6months, essentially CDS is insurance against Canada defaulting within the next 5 years. Canada also has the greatest increase in M1 money supply of any nation on the list. But I think the biggest kicker is Canada holds no gold in the central bank and is the only nation without. Gold is the anchor of the monetary system and provides confidence in a country's ability to service debt. However, the prediction needs to be taken with a grain of salt. The timing of such an event is nearly impossible to predict as hyperinflation is always the result of a loss in confidence in the purchasing power of the currency and confidence is purely psychological. Though I believe it to be inevitable I'm not about to suggest it's weeks or months away. We all know the market can stay irrational longer than most can stay solvent.

[helmsdale]

https://youtu.be/3N_Lgzn1v2A

Northman Trading. It's an hour and 20 min long.

Favorite quote:"listening to Janet Yellen, is like chlorophorm in audio format".

[canolacrazy]

Very well said Biglentil. Yes, markets can stay irrational for a long time, especially when central banks are printing money at these rates. However, this site is for exchanging ideas and trying to think through options for commodity marketing, whether that be in the farming business, or other commodities like oil and mining. We're all trying to make a buck or two and i value other opinions as well as try to share a few of my own.
As far as bitcoin goes, it may be a long term loser, i originally thought the same thing. However there is a limited supply of the product, as far as i can see no one has control over it. it is a true market based product, not one even central banks can manipulate. i think it is worth putting a few bucks in and see what happens. So far my returns in bitcoin and oil have been very good in a short period of time. If they tank, then I'll suffer the consequences, the way any market should treat me. If Van Hest is correct, these commodities will benefit because they have world wide stable value at a time when currencies are eroding.

[Guest]

Don't blame the baby boomers. I doubt there are any or many in Trudeau's cabinet old enough to be boomers. He has double the debt in less than 12 months.

and most of us never voted for that outfit