Submitted by FRANCIS MARION
Canada Goes Full-Krugman, Jacks Up Borrowing And Spending, Confirms Gold Sale
Bill Morneau took centre stage last week in the Canadian Parliament and didn’t disappoint. The new Liberal finance minister’s first budget jacked up program spending across the board, to be paid for by borrowing and, eventually, presumably, money printing. His rhetoric was coated with suggestions that “economic growth” would solve the country’s problems. The only folks left out were taxpayers and savers.
On the face of it, Morneau’s logic makes sense. With interest rates near zero and the Canadian government’s debts among the lowest in the G-7, why not borrow a bit and invest in infrastructure? Well, there are several reasons – and all of them augur well for the future of gold.
Canadian government debt at record levels
Morneau is technically right. The Canadian government’s debt is at low levels compared to that of other advanced economies. However, those numbers are shaky. For one, they include only federal debts, not provincial debts. If you include all Canadian government debts including the provinces (US states are not allowed to run deficits), things look far worse.
Furthermore, Morneau’s numbers don’t include huge debts that the former Conservative Harper Government never bothered to record as liabilities, such as deferred pension and healthcare costs, a policy Prime Minister Trudeau’s Liberal government is continuing. Canada’s Fraser Institute estimates that such unfunded liabilities totalled nearly $4.1 trillion in 2014. Those unrecorded debts alone are equal to more than 200% of Canada’s GDP. Worse, Canadians, whose household debt-to-disposable-income ratios are at record levels, are in no position to finance those additional government obligations.
Sell off gold, spend the cash
During the hours before Mr. Morneau tabled the budget, he wandered into the lock-up room, where reporters were poring over advance copies of the document. There I had a chance to ask him about reports that Canada has sold its last gold reserves, and whether that was prudent, given uncertainties in the world economy and the Bank of International Settlement’s recent warning that global NIRP/ZIRP/QE monetary policies weren’t working as expected.
Morneau didn’t bat an eye. Canada’s reserves were at an appropriate level, he responded. An hour or so later he walked over to Parliament Hill and announced that the new government’s total spending would explode by 6.9% to $317.1 billion during the 2016-2017 fiscal year. The increases would be partly funded by the cash from gold sales and by $30 billion in deficits.
In his youth, Morneau completed graduate studies at the London School of Economics and INSEAD in France, where, as Talleyrand would have said: “He learned nothing and forgot nothing.” The result, as might be expected, was a Canadian budget that was pure Keynes/ Krugman, with a bit of Larry Summers thrown in.
The hard money community, of course, won’t believe a word of it. But Canadians will be praying that Morneau is right.
“If you include all Canadian government debts including the provinces (US states are not allowed to run deficits), things look far worse.”
Yuuuup!!
“Canada’s Fraser Institute estimates that such unfunded liabilities totalled nearly $4.1 trillion in 2014.Those unrecorded debts alone are equal to more than 200% of Canada’s GDP. Worse, Canadians, whose household debt-to-disposable-income ratios are at record levels, are in no position to finance those additional government obligations.”
Yuuuup!!
And no one who is in debt, will believe a word of it!! We are so screwed when the bill comes due.
Libs or Cons…..really no difference when your talking about Canadian debt loads
Thank you Francis for the revealing article that no one wants to hear about……..
Can-of-Duh is already in recession and goobermint debt puts more money into the economic system creating inflation (debasement of currency). This shit doesnt work just as wars do not fix economies (see GWB, Connedgress + Iraq, Afghanistan) didnt work to our cure the ongoing recession here.
My Dad once fixed furnaces. A long time ago the government spent a bunch of money building houses on a reserve. A couple of years later he went back to service furnace in one of these houses. When he walked in he noticed that residehts had been tearing out the studs in wall to feed the stove.
The governments across this land are doing much the same. What could go wrong with this plan in a country covered by snow six months a year.
I’d say lots. People better buy warm blankets. There is a cold front coming.
There’s no hope for my province or this country…I just found out all my spouse’s and my hard work this past year bought us a ticket to Trudeau’s ‘tax the crap out of anyone earning more than $200K club’ at a rate of 53%…We’re at ‘why do we bother working hard if they’re just going to take it all’…$200K won’t buy you a condo around Toronto, nevermind anywhere you might want to live…but my uber-liberal co-workers in Toronto thought it was awesome when Trudeau gave out winter coats to Syrian refugees who will be nothing but a drain on my country. 🙁
It seems it’s time to decide whether the Denninger strategy of earning the minimum so you pay no tax is the way to go…we’re not ready to go full Barnhardt and start a tax strike.
Krugman and his ilk are the pinworms of society wallowing in the bowels of humanity. They serve no purpose and have no value to society.
Rob is exactly right, western societies have built up a lot of wealth and resources from centuries of people saving, Keynesianism and socialism can live of that for a long time and look like it works, then the denouement arrives when reality reassertion itself. Of course that will be blamed on saving and capitalism/freedom both of which will then be suppressed.
Canada…
I’m sure most of them are okay… but you want to know what the rest remind me of?
In every neighborhood, there’s that one snotty, uppity old lady who keeps to herself. Doesn’t associate with her neighbors or talks to them unless she has to. She doesn’t like guns, or “those people” who live across the street, and has nothing but sniffing disdain for them.
But she will directly benefit from the lower crime rates that gun ownership comes with – living in relative safety on the coat-tails of others, all the while grousing in the face of her own hypocrisy.
That’s what Canada reminds me of.
They sit up there – fat, dumb and happy – and enjoy unprecedented peace and security because their neighbor to the south is a Big Dog and nobody wants to fuck with them… not even with your dick…
But they’ll happily point fingers and tell us how much our shit stinks and then do dumb shit like going Full Krugman – the only reason why they have the cash to even contemplate that is because WE are the armed neighbors. THEY don’t really have to deal with their own security and spend the coin for it – we’ve already done that. Mighty white of us, if I say so. The Canadians know if anyone fucks with them, said individuals will get an assfull of boot, courtesy of the US taxpayer…
Sort of like how the Europeans can afford all sorts of nice shit because we soak up their national security bills…. and they badmouth us as well.
Wonder what would happen if we just suddenly stopped pulling security duty for everyone else? Let them pay for their own armies? Naval assets? Develop their own missile defense and air assets and fend for themselves?
So Francis, I have a CD in Canadian dollars, still waiting for the inevitable $US dollar crash.
Maybe I should sell it………
Billy
While I get the resentment for Amercians carrying the burden of defence. I’d say it is better to cast contempt towards Europe. I do think it is disingenuous to think my country will be invaded by anyone other than the USA. All you have to do is look at Map. Where would this invading army land. The D-day landings only had to cross 20 miles of English channel rather thousands of miles that a hypothetical invading army would confront. Even if they started in Nova Scotia it is 1200 km to Montreal. It would take millions of soldiers to take this land. Most of the towns in my province are separated by 30 miles of woods. Great places to hide and ambush logistics required to maintain an occupation.
As far as the guns go we have almost as many as you guys. We are a gun culture too and armed to the teeth. We are only missing the big shitties and their ghettos full of crime.
So we don’t need an army. The land is our defence. I do agree with you on one thing though. We have an over abundance of Libtards, the snotty, uppity old lady as you will, who will never resist the opportunity to be self-righteous. I do appreciate where you are coming from in what you say.
But please. Realistically the biggest threat to our sovereignty is you Yanks not some nebulous external overseas threat.
I agree with Rob in Nova Scotia about the US being the first to invade Canada, likely soon after martial law is declared in America and all non-Muslim citizens subjugated.
Nestle won’t be able to resist the fresh water in our lakes and rivers they can bottle, and the Bureau of Land Management is probably cumming in its pants already thinking of all the land here full of resources they can steal and sell to the Chinese and Russians to pay down US debts.
Plus Obummer is obviously eying up the Northwest Passage. He tried an Old Jedi Mind Trick on Justin recently when he publicly told him the Northwest Passage is international waters. Nope, check a map, it’s all Canadian. Sheesh, like it isn’t bad enough the Russians are encroaching from the Arctic for our resources there.
And who is Justin borrowing that $20 billion extra from? I hope it’s not the USA, which likes to lend nonexistent digital money to countries with loanshark terms that make those loans unrepayable. Ever.
Kinda funny when Rob Ford got sick he didn’t go to one of those “Wonderful ” Canadian hospitals…nope he came to the USA .
While I get the resentment for Amercians carrying the burden of defence. I’d say it is better to cast contempt towards Europe.
Which I already did. Almost in the same breath. However, we pick up the tab for most of them directly, while you all enjoy an indirect benefit.
I do think it is disingenuous to think my country will be invaded by anyone other than the USA.
Who said anything about “invasion”? You all enjoy the same benefit we do: two really big assed oceans on either side – an unworkable, impossible logistical problem when contemplating invasion.
I specifically said “fuck with”. Which YOU took to mean “invasion”. The way that the US’s enemies look at us is “The US itself is just fine. Nice place. It’s just full of Americans”.
Why invade us when they can biff a couple three or so nukes about 200 or 300km up and blow us back to the late Middle Ages, technology-wise? Best case survivability rate after a year is ~18% or so. Or, about the number of people we had around 1875. Get us fighting each other, kick back, eat cornflakes and when the vast majority of us are starving, ragged, disintegrating from plague or whatever, then roll in with “help”… and then never leave.
If there’s anything disingenuous, it’s the rest of your post based on the “invasion” nonsense that YOU made up and then attributed to me. Then you spend the rest of your post disproving your own invention, pointing your finger at us…
Nice of you to throw me a bone and agree with me re: snotty, uppity, hypocritical self-righteous assholes… which was the point of my post.
And if you bother to look, you yourselves are importing your own bunch of Invaders almost as fast as we are. No “nebulous” invasion need come – you’re doing it to yourselves, same as us.
And if we get hit with an EMP (and China has spent the last 20 years attempting to increase the EMP yield of nukes. Anyone can build a big nuke – that’s old news. But a smallish one with a helluva EMP whomp? That’s new.) then YOU get hit with the same EMP.
As far as some country doing the dirty deed? Heh… you’ve probably never even heard of 4th Generation Warfare, have you? Or if you’ve heard of it, you don’t know much about it…
It doesn’t need to be a country or any sort of nation-state. Funnel a couple devices through multiple cutouts to some 3rd or 4th party with an axe to grind. Even one of those flying ashcans Saddam used – the Scud – has almost enough oomph to get one high enough if you aim it straight up…
I like you, Rob. I bear you no ill will. But you got some sand in your cooch because I belled the cat and stated the obvious – that Canada benefits immensely from such a powerful southern neighbor, but still points fingers and does dumb shit. Dumb shit only possible because they can siphon resources from national defense and elsewhere specifically for said dumb shit. And only possible because they can get away with it – because of us.