hear me out...

A

animal-inside

Well-known member
Trusted Member
Going to discuss our economy for a minute...


There is something called "wealth redistrihution".. Its a technique governments use to move monies from one group of people to another..

In general its used to move welath from upper class to lower class.

It happens all the time through taxes, fees etc...


In order for an ecomomny to work well, people need to earn money and in turn spend money on product. This makes the ecnomy need to have product available, which means products must be produced (think jobs)... The money people are buying with their money, the better the economny and the better the unemployment is (lower UE).

When money is not spent, ecnomny slows down to a crawl.. This CAN happen when upper class people save too much money and that money is no longer being used to buy product..

So governments will find a way to pull this money from the upper class, give it to lower class because the lower class will spend it and thus keep economy moving.



So we all know Canada has been hit with pretty high taxes/ fees lately... And it looks to be just getting worse.. But for the most part, lower class people arent' going to have to pay as much of this but will actually benefit from these taxes through social programs..

All seems to make sense when I think about it.. But here is thought I had today...

Our government has printed off massive massive massvie amounts of money lately... YOu can not print off massive amounts of money and not have inflation happen..

We are on the verge of hyper inflation.. Its sitting on the horizon right now.. We've seen countries who've experienced hyper inflation and it did not go well for them.. Essentially ruined the country and has put many countires into 3rd world status..


So my thought today was...

I wonder if the huge jump in taxes and fees we are seeing and will see is our govenrment realizing hyper inflation is coming and they are using tax/fees to pull money from our economy to remove it to help reset us back to have the right amount of money in circuluation to avoid hyper inflation..????

While doing so, they will also of course use that techniwue of wealth redistribution from upper to lower so the lower spends it instead of saves it (thus making it all even worse)..

Thoughts?
 
you seem to not understand macroeconomics and monetary policy which is okay... in 2008 the federal reserve “printed money” via QE to save the USA during the GFC. But after that inflation boom never came...QE does not cause the hyper inflation you are talking about.. quantative easing..

that’s what the bank of Canada did... it’s called QE.. they buy bonds off bank balance sheets and replace it with bank reserves.. it’s way more complicated but it doesn’t actually mean more money is printed a la Venezuela or Zimbabwe
 
if that was the case.. 2008 QE in USA would of cause inflation.. it did not.. inflation is cause by labour.. more people work there is less labour supply wages go up and etc etc.. a fully functioning economy causes inflation.. yes we see inflation now in lumbar , home prices.. but that is not the hyper inflation 100000$ gets you a candy bar..
 
The real problem is if economy does begin to recover.. and there is persistent inflation at their target and they raise rates.. the cost of borrowing goes up cost of mortgages etc that is the real problem.. will everyone Bussiness consumers be able to handle that burden..
 
the rates are near 0 here and USA.. USA tried to raise rates after 2008 and they had to Start lower them before covid even happened... we never fully recovered from 2008... Europe has negative interest rates and has never stopped doing QE.. Japan too has been doing QE and negative rates for years.. both no hyper inflation lol... so you are completely wrong and I hope I briefly informed you on some valid points.. hence the second part of my username
 
I am dealing with a kid not sleeping right now, but I Will read what you wrot.e.

I've never claimed to be a economic genius... learning as I go.. And I was thinking aloud..

I will say though, I am pretty sure we are seeing inflation right now and I've read many articles supporting that its happening..
 
Inflation and hyper inflation are not the same thing... re read what I wrote look into some of those terms will help you a lot.
 
FitTrader said:
you seem to not understand macroeconomics and monetary policy which is okay... in 2008 the federal reserve “printed money” via QE to save the USA during the GFC. But after that inflation boom never came...QE does not cause the hyper inflation you are talking about.. quantative easing..

that’s what the bank of Canada did... it’s called QE.. they buy bonds off bank balance sheets and replace it with bank reserves.. it’s way more complicated but it doesn’t actually mean more money is printed a la Venezuela or Zimbabwe
Click to expand...

I read about this back when we went through tthe 2009 stuff...

I also recall Canada put out a big thing on bonds last spring correct?

Our finacial advisor told us not to buy the bonds last spring due to possible inflation. Reason being if I buy bonds and loan the government 1000$ today and then when the bond is paid back, the 1000$ just won't be worth the 1000$ I gave them regardless of the interest offered.

*I should add, I shouldn't use the term hyper inflation.. I agree, your right that there's a big difference between the two.
 
FitTrader said:
if that was the case.. 2008 QE in USA would of cause inflation.. it did not.. inflation is cause by labour.. more people work there is less labour supply wages go up and etc etc.. a fully functioning economy causes inflation.. yes we see inflation now in lumbar , home prices.. but that is not the hyper inflation 100000$ gets you a candy bar..
Click to expand...

I understand inflation is a part of normal healyh economy.. I was reffering to much higher, but again I shouldn't have used hyper inflation.
 
FitTrader said:
the rates are near 0 here and USA.. USA tried to raise rates after 2008 and they had to Start lower them before covid even happened... we never fully recovered from 2008... Europe has negative interest rates and has never stopped doing QE.. Japan too has been doing QE and negative rates for years.. both no hyper inflation lol... so you are completely wrong and I hope I briefly informed you on some valid points.. hence the second part of my username
Click to expand...

I understand what QE is.. But is it possible to control and eventually reset to normal balance with QE?? It seems that all the craziness that has happened isn't going to balance out anytime soon and QE is going to be like a fart in the wind.

With the rise in prices we are seeing right now, what is going to happen to make our wages balance the new cost of living?

I highly doubt my next contract negoiation I will get a nice raise to match the higher cost of living. I am a government employee and they have done nothing for the past 8 years except try to cut my pay (actuallty since 2009 they have frozen my salary).
 
what BOC did was QE. They bought bonds off banks balance sheets to keep interest rates low and allow liquidity in the financial system .. low rates promotes borrowing and expansion in times when it is needed like the covid pandemic (which that in itself is another debate)... but low rates with an economy recovering causes inflation ( wages go up, prices go up) which will then force the BOC to raise rates to slow down the overheating economy... which if that happens if it does because we have to define what is actually a “recovery” that will be the real strain...
 
animal-inside said:
I understand what QE is.. But is it possible to control and eventually reset to normal balance with QE?? It seems that all the craziness that has happened isn't going to balance out anytime soon and QE is going to be like a fart in the wind.

With the rise in prices we are seeing right now, what is going to happen to make our wages balance the new cost of living?

I highly doubt my next contract negoiation I will get a nice raise to match the higher cost of living. I am a government employee and they have done nothing for the past 8 years except try to cut my pay (actuallty since 2009 they have frozen my salary).
Click to expand...
You nailed it with this post...

For a recovery to be in progress labour needs to be full.. so the unemployment rate needs to go down.. the more labour supply has a shortage (less workers looking for a job because they have one) the more wages go up(busssines need an incentive to get employees ).. but it now if it is only a fixed areas that have inflation like lumbar, asset prices , home prices but other people are mostly unemployed they can’t raise rates for the time being so this painful discrepancy will remain..

for me I have been invested in FAANG since 2015-2016
I do not go into any hype stocks or anything like that.. I keep it simple on what I know has proven to be innovative and longevity... as for bonds I was i bought TLT ( us bond etf) in March , when the fed did an emergency rate cut and increased QE. Sold that in July when inflation and re opening narrative started... the narrative vaccine and re opening will cause inflation

I think hyper inflation is what triggered me lol so sorry about that

but in reality it’s not easy times to start investing we are in a very interesting period as a world economy
 
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FitTrader said:
You nailed it with this post...

For a recovery to be in progress labour needs to be full.. so the unemployment rate needs to go down.. the more labour supply has a shortage (less workers looking for a job because they have one) the more wages go up(busssines need an incentive to get employees ).. but it now if it is only a fixed areas that have inflation like lumbar, asset prices , home prices but other people are mostly unemployed they can’t raise rates for the time being so this painful discrepancy will remain..

for me I have been invested in FAANG since 2015-2016
I do not go into any hype stocks or anything like that.. I keep it simple on what I know has proven to be innovative and longevity... as for bonds I was i bought TLT ( us bond etf) in March , when the fed did an emergency rate cut and increased QE. Sold that in July when inflation and re opening narrative started... the narrative vaccine and re opening will cause inflation

I think hyper inflation is what triggered me lol so sorry about that

but in reality it’s not easy times to start investing we are in a very interesting period as a world economy
Click to expand...
I felt the inflation in Alberta in 2004-2008. Part of the reason I left. The province was starting to become IMO unaffordable to me because my wages didn’t increase with inflation. Made a fortune off my house though.

And right now I’ve avoided investing. Sad part is, I finally have enough to invest, lol.
 
Alberta is the same right now… Inflationis been around 1.8% for the last few years but no one‘s getting raises.


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