Thursday, July 27, 2017

FRAGILE ECONOMY: Trudeau Government Worried About Interest Rate Hikes

This moron destroying Canada has NEVER worked a real job. He was a part time drama teacher, snowboard instructor and bouncer!


FRAGILE ECONOMY: Trudeau Government Worried About Interest Rate Hikes

Yet they still keep piling on the debt.

A new report from Bloomberg reveals that the Trudeau government is increasingly worried about interest rate hikes by the Bank of Canada.
The fear centres around highly indebted Canadian consumers, and the idea that higher rates could reduce consumer spending and cut growth.
As noted in the report, “Officials within Prime Minister Justin Trudeau’s government are concerned the Bank of Canada is moving too quickly to raise interest rates, fearing higher borrowing costs could inadvertently trigger a downturn.”
And yet, those concerns won’t stop the increase in debt being racked up by the government. Says the report, “The discontent, however, signals Trudeau and Morneau also don’t plan to rein in a spending program, focused on infrastructure and payments to families, that’s projected to result in deficits totaling C$102 billion ($82 billion) over the Liberal government’s first four fiscal years.”
It’s noted that household debt is at record levels, and since 2008/2009 consumer spending has been the biggest driver of growth in the economy. Since that consumer spending is heavily based on unsustainable debt levels, interest rate hikes could be a serious problem.

National debt

Lost in many reports about interest rates is the impact on the debt and deficit. Our current federal debt stands at over $646 billion dollars and counting. Our federal & provincial debt combined is over $1.4 trillion. And as noted above, Trudeau is adding to it very quickly. It’s also essential to point out that Trudeau’s deficit is a deficit of choice. The budget was balanced when he took over, and he faces no worldwide financial crisis. So, he’s choosing to add to the debt and damage our financial future.
According to the Fraser Institute, Canada’s federal debt interest payments are expected to reach $25 billion this year alone. Now, the interest rate hike will add billions to that figure, money that is then not available to reduce taxes, build infrastructure, or strengthen programs for Canadians.
Increased debt also makes our economy more fragile. In a crisis, having low debt levels gives countries many more options for responding to economic challenges. Yet, when debt is already high, those options become limited, and economic confidence can be lost far more quickly.

New thinking needed

The fact that the Trudeau government is concerned about interest rates, yet plans no change to their economic “strategy,” shows how badly we need new thinking. For example, when the full burden of household debt starts to be felt, consumer spending will take a hit. The housing market in numerous cities will experience a (possible severe) correction. That will have a serious negative impact on Canada.
Yet, it’s not tough to imagine how things could be different. Imagine if the government saved billions by massively cutting the bureaucracy, and then eliminated carbon taxes, redirected existing spending to real infrastructure (roads, bridges, transportation), eliminated tons of regulations, and slashed taxes for the middle-class and working Canadians. That would enable the country to withstand rising interest rates, and offset some of the damage to consumers from rising debt payments, and generate growth outside the consumer sector.
Unfortunately, the Trudeau government keeps going in precisely the opposite direction, and are therefore creating the very situation they fear.
Spencer Fernando
The elites want to hide their many failures behind political correctness, deception, and manipulation. We need to push back and spread the truth.
That’s why I write.
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