Once the dust begins to settle over the war in the Ukraine, central banks seem committed to a round of interest rate hikes. In an economy as beset by exponentially rising debt as ours is, overburdened debtors should be on the lookout for some torpedoes racing for their hull.
“A steep path unlikely” is about as comforting as knowing that the torpedo speed has been dialed back.
The Bank of Canada will certainly raise interest rates next week. It probably should have done so in January, but Macklem decided that would have been too abrupt after promising in the summer of 2020 to leave the benchmark rate near zero until sometime in 2022.
The rates won’t be high enough for people, businesses and institutions to keep money in Canada knowing that their money can be frozen on a whim.
I’m wondering exactly how sound our banking system is and how much money has fled the system, if not the country. On the plus side, I’m sure Trudeau is having the printing presses work extra hard to print cash. And it wouldn’t surprise me if behind the scene deals are being made to keep financial institutions solvent.
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That’s how you beat inflation!
Printing money is like photocopying Monopoly money. At some point, the game will be unplayable.
I’ve noticed over the last year or so that the government has been running an oddly large number of PSA’s about how your deposits are insured in case of bank failure. That by itself isn’t proof of anything but it does get one wondering.
Yes, Chris, but there is an upper limit for – I think – each account (it may be for all the holdings in a given bank). I’m just waiting for ze gov to switch that to an upper limit for all one’s holdings in all one’s accounts.
Can’t you smell the large line of bankruptcies this will generate as the broke with no money becomes more broke.
On top of increased property taxes.
Higher fuel costs.
And devastated purchasing power of your currency.
Forgotten to add in the inflation.
With love from your banker and approved by the Prime Ministers office.
Bankers want their customers to go broke?
Seems like an odd idea.
You’ll own nothing and be happy by 2030. ~ The World Economic Forum.
My dad lived through German hyper inflation.
His dad paid off the mortgage on the family home with hyper-inflated currency. Many others did the same. The German banks went bust, Germans got their property debt free.
When banks foreclose the last bloody thing they want is to keep the property. Google up ‘Alberta “dollar deals” foreclosures’. In the mid 1980s Alberta was hurting economically and banks were foreclosing. I worked in the industry. Banks hated foreclosing, hated, hated, hated it.They haven’t the foggiest idea of how to manage property. They cannot afford to carry property with a crap price and/or rate of return or they go broke too.
Watch It’s a wonderful life. Or read about The Depression.
They own for pennies what you took a lifetime to build then they rent it back to you.
You’ll own nothing and like it.
And The Big Guy gets 10%.
it would if things were expected to return to “normal”, but that is impossible. Canada as a nation is insolvent. The banks are preparing to leverage their networks and customer data as participants in the great reset, and become the infrastructure of the New World Order. Two factors are causing inflation, they can’t be tamped down by always inadequate Keynesian tools, inflation expectations have to be beaten out of the system. That can’t be done with the governments in the fiscal shape they are in, cashflow would drop to unacceptable levels, and the state would be caught out printing in a non pandemic time. There is no fixing this is any non revolutionary fashion, which is why nothing smells right, and hasn’t for two years.
Before my husband retired some of the fellas he worked with would brag that they lived from pay check to pay check. They’d take out loans for everything from a mortgage to financing quads, trucks, fifth wheelers etc. Most of them were in their late fifties, wonder how they’ll fare when the interest rates go up? I suspect there will a lot of bankruptcies in the future. I can’t believe the level of debt young people carry, I see people who work at the Superstore living in 500,000 thousand dollar houses with two new cars and a host of other luxury goods how do they pay for it all? We live debt free thank gawd, the interest rate on our first mortgage was over 20 percent.
Are they expecting inheritances?
Can’t comment on the cars and luxury goods, but 500,000 dollars is well below the average house price in Canada. People have to live somewhere so people buying houses now pay 500,000 for a house, just like you made the decision to take out a 20 percent interest mortgage on your house. It’s either that or pay insane rent and have nothing to show for it. It is already devastating for the economy that people have to pay as much as they do to put a roof over their heads. It means they have no money to spend on anything else, and when interest rates go up these people will be homeless and banks will be sitting on huge inventories of repossessed homes that no one can buy except our replacement that the government can’t bring in fast enough.
Things are going to go from bad to worse for some of us.
https://capforcanada.com/liberals-erase-history-de-colonize-canada-with-monument-tear-downs/
The Liberals want to “decolonize” Canada. This is really the start of the final solution to the Canadian problem. They’re not content to replace us through mass immigration, they intend to liquidate us in the process.
It’s like Islamic thinking, nothing came before.
We owe nothing except the monthly visa bill. Most investments outside of Canada in etfs xcanada. Large amount of usd due to work in cash in us bank divisions of major Canadian bank. Purchased a lot of firewood this year and last. Well stocked pantry(thanks Kate). Even learning how to store foods in mason jars. Made our own marmalade(hey it is a start ). Bought a little of gold coin(my first time). Can’t buy weapons but can look at bows and knives etc. Looking at moving some accounts but is difficult as I can no longer trust major banks(spineless idiots). Will see.
Related:
Fiat Currency Zero Hour: Russia And China Might Collectively Challenge The Dollar’s Reserve Status
https://quoththeraven.substack.com/p/fiat-currency-zero-hour-russia-and?utm_source=url
“The Bank of Canada will certainly raise interest rates next week. It probably should have done so in January, but Macklem decided that would have been too abrupt after promising in the summer of 2020 to leave the benchmark rate near zero until sometime in 2022.”
They needed those two full years to devastate the average Canadians savings before upping interest. It’s as if they somehow knew pandemics and lockdowns were just over the horizon.
Over time, this ever-increasing cost of borrowing will eliminate all but the wealthy from affording a mortgage. With most rental markets already tight and inflation an unrelenting pressure, we may be standing at the edge of an explosion in homelessness. All purposely caused by malevolent politicians put in power by vacuous losers. Thanks a lot, you leftarded assholes.
Trump warned us. They’re coming for you.
Dennis, once the dust settles over Ukraine there may no longer be functional central banks at all.
Fair interest rates should hover around 5%. The central banks of western countries have been lower interest rates forever trying to avoid the regular ups and downs of the economy (claiming that they control inflation). Like most everything the government touches, this will end badly. They will try to raise rates once or twice and it will fail to change inflation, the economy will do what it needs to (probably shrink a bit). Then they will immediately stop raising the rates. Their go to tool has lost all its power.
My take on interest rates is … they must and they will rise, but not nearly enough to stop inflation. The government can raise taxes or it can print more money to pay its bills. It has decided on the latter. This means that anyone who has saved money is getting a big haircut.
In reality we are years away from high interest rates. So talking about 20% mortgage rates is meaningless. But I did own a house when interest rates were high. It cost me $67,000. It was a near mansion. Today you can’t buy a decent place for $670,000 unless you live deep in a rural area. The big problem with rising rates is the damn banks. They approve people who barely qualify at 2.5%. They should have a minimum rate of 5% which rises but never falls below as rates change. Ah but here I go trying to run the world again.
I welcome higher rates. I want to see who is swimming naked. Maybe pick up a nice Bentley or even a Ferrari on fire sale – Porsche for sure.
Exposing the impossibility of being able to pay off public debt is the reason why interest rates have been so low. You just can’t buy votes in a manner that the Eloi expect and are readily delivered by the Spawn-Fuhrer and his NDP dancing monkeys when program spending has to be cut to service debt. Debt monetization and inflation is their only way out. Rates will rise a little but nowhere near high enough to stave off major currency issues from inflation. The next few years should see industrial scale wealth destruction not seen in 90 years.
Even before the invasion of Ukraine, the sanctions and disrupting Russian access to the SWIFT system, the financial system was house of cards that could collapse at any time. But, then, why should Canada worry because it has the lovely, charming and talented Chrystia, she-wolf of the Libranos, at the financial helm.