Bankster Economic Insights
Updated: Aug 31
Let's kick things off with a doozy quote from our esteemed Prime Minister Justin Trudeau:
"We decided to take on that debt to prevent Canadians from having to do it." (1)
Sounds like someone failed his basic economics class in high school.
Oh, wait. There’s no such thing as a basic economics class in high school. My bad…
A word of advice to our leader. You might think about getting a haircut as it seems your noggin is overheating and preventing fresh air from clearing out the fog upstairs.
The sad matter is that many voters fall for this grandstanding, thinking "thank goodness the government saved us from having to take on extra debt".
Sure? Because you, as a taxpayer, now don’t need to worry about that debt? And, if you’re not paying taxes, for whatever reason, worry not for the inflation tax will get you too.
This beauty of a quote comes enshrined in news that Canada’s deficit this year has swelled to $343 billion. Don’t worry, folks, that’s for our children and grandchildren to worry about. Assuming the can will be kicked far enough down the road before it disintegrates, we’ll be long dead before the piper needs to be paid.
As a result, Canada is issuing “an unprecedented amount of debt”, as proclaimed by the BNN Bloomberg source.
Well, no kidding! If the government is taking on standing in as the debtor for individuals, what else do you think will happen to Canadian debt issuance?
What I find difficult not to laugh at is the fact that it’s likely, though pure speculation on my part right now, that much of that debt is being bought up but none other than Canadian investors. The same people “saved” from taking on the debt themselves are financing the debt that apparently saved them.
Or what about all those pension managers buying “safe” government bonds as investments for their pension funds?
Oh, the circle of Keynesian credit continues at such dizzying speed that most people now choose to ignore it. Besides, ignorance is bliss, is it not?
By the way, the news drove yields up on Canadian bonds. You think? The “eye-rubbing” number though is that the yield on a Canadian 30-year bond “jumped” to 1.092%!
Wait. Say what?
How would you like a 30-year uncollateralized loan at just a smidge over 1%?
And please, don’t give me this non-sense that the debt is collateralized by way of full faith and credit of borrowing power of the government.
But, in case you didn’t hear, Austria has us beat, having recently floated a 100 YEAR bond which yielded out at 0.88% at subscription! (2)
As an article at Investing.com writes:
“Looking back a hundred years, the small republic (i.e. Austria) that emerged from the shattered Austro-Hungarian Empire after World War I still had annexation by Hitler, occupation by the four powers, decades of neutrality and the European Union ahead of it.”
In other words, no one even knows if Austria will be around as a country in 100 years, never mind be able to pay back this debt. And yet even at the risk of non-existence, an EXCESS of investors were found more than willing to pick up these bonds.
And you thought the clown show is confined to our neighbor south of the 49th parallel?
Speaking of which, you also think only the US is dealing in the trillions of dollars?
“Total market debt, which includes a ramp up in Treasury bills, will grow to $1.2 trillion from $765 billion.”
And if you’re about to jump on me for picking on political colors, here’s the leader across the aisle in a video interview on BNN Bloomberg on July 8, 2020: (3)
“We know Canadians will have to pay that back eventually.”
Thank you, Captain Obvious. But I guess he thinks he’s doing the average Main Street Canadian a favor by making this statement since, by most accounts, not many have a basic foundational education in finance and economics. So, consider yourself saved by this outgoing political bankster, who I’m sure will land himself a nice cushy “consulting” gig after leaving the sacred lands in Ottawa. Where would you be without him?
But I'm just a recovering bankster. What do I know?
(3) BNN Bloomberg Video Titled "There’s a lot of money being spend, but we’re not getting that return on investment: Andrew Scheer"