Good morning ,
yes there is inflation but it’s not caused by monetary policy QE. The inflation is caused by supply constraints and bottle necks. Especially at ports and not enough workers to make sure everything runs smoothly and everything is packed up . For example chip shortage is causing issues with phones , cars and many other items. Oil demand is back up as countries come out of lockdown but supply is still not back so the price of oil is up to highs not seen since 2014. Ports are backed up and there is no truck drivers to unload the containers which also have gone up in prices. But all in all there is still many millions of people in the USA and Canada who are not back into the labour force. And the federal reserve has began to note that they will start reducing some of their QE and the bank of Canada also.
This is all caused from covid and lockdowns and labour shortages and constraints.
again QE is for the markets and the economy to function during times of it breaking down
The QE does not directly cause inflation
QE from the bank of Canada has no influence on opec deciding not to raise oil supply a few weeks ago to reduce the price.
if you want to see something interesting check the value of the Canadian dollar relative to the USD. As Canada is a country which currency does well when oil is up. Check from March2020 to now. The Canadian dollar was 1.46 for every 1 usd now it is 1.236 for every 1 usd
This is enough to squash that QE causes hyperinflation as our dollar has gotten stronger relative to reserve currency of the world.
also another issue is energy crisis is Europe and China. China has to reduce some factor production hours in areas due to low supply of natural gas and energy. But demand is still high for Christmas time and this causes prices to go up, price of shipping container is up etc etc and the whole supply chain is broken
This is due to human error not Monetary policy
I went to crate and barrel they said 6-8 months to arrive for a couch and they can’t even promise it
And that’s coming from usa not even overseas
as for the wages. Depends what sector
In the service sector due to lack of supply restraurants have to pay up to get staff
but a new car salesman is being fired a there is no inventory to sell
So your saying its basically supply and demand?
I understand the supply is very very low right now. I was told the other day that a seacan of goods from China has more than doubled, depending on the goods inside.
I know the contractors in my area (trades) are hurting right now. They have told me what they charge the customer has risen a LOT because the material they use has risen a LOT. And in turn, people aren't renovating, building etc.. so they are hurting..
Is this not still inflation? My understanding is inflation is when your dollar buys less then before/ when prices go up but wages do not.
In my post I didn't mean QE is causing inflatation. I meant QE is not not controlling inflation.
Also, do you predict a big jump in interest rates in the near future?
To me, I can not see how they can raise interest rates. Think about how many Canadians have a 300-700,000 mortgage right now. And how many of them are paycheque to paycheque.. And include all the landlords in that with their rental properties..
IF they increase the interest rates from near zero to say 5-7%, many many people couldn't afford their mortage anymore or would have to make major $ cuts to other areas. To me, with the area I am in and the people I know, a 5% jump in interest rates would tank a lot of people since many have so many loans for houses/cars/toys.
Do you think our dollar really is worth what we are saying it is? My understanding is "money" is supposed to be a direct reflection of goods/services produced and sold.
