Posted on 06/03/2022 2:41:50 AM PDT by Jonty30
OTTAWA — The Bank of Canada will probably have to raise its policy rate to the top of its neutral range, double its current level, and could go higher, to prevent soaring inflation from becoming entrenched, a deputy governor said on Thursday.
Paul Beaudry, speaking to a business audience in the Ottawa area, said the central bank was considering the pace at which it moves to neutral, the 2%-3% range where interest rates neither stimulate nor weigh on growth, along with how high rates may go.
(Excerpt) Read more at edmontonsun.com ...
It basically means doubling the deficit from $315 billion to $630 billion.
That’s like running a $6 trillion dollar yearly deficit.
Did anyone post the article from the blackrock CEO warning that inflation is going to be way worse than anyone seems to be talking about and will shock the world?
People who went bonkers spending because our Baby Doc told them it was OK to do so are in for some nasty consequences (even though the rest of us here take it on the chin to one extent or another).
Wait until the USA has to do the same thing, I imagine a day in the next year or two that our deficit is greater than the actual budget.
IOWs, if the budget is 5 trillion and the deficit being 10 or 11 trillion or more.
The US rate should be over 6% to get inflation under control. Doubt the Fed will go that high.
(The Bank of Canada will probably have to raise its policy rate to the top of its neutral range, double its current level, and could go higher, to prevent soaring inflation from becoming entrenched, a deputy governor said on Thursday)
Oh good. This should work out real swell.
That way, CDs can yield 5% with the bankers getting 2%.
A lot of retirees counted on pulling their money out of stocks, buying CDs and living off the interest.
Since they can't, they are hanging onto as much of their money as they can and slowly spending the principal.
If they could get 5%, a LOT of money would start flowing that is now being held.
Here is the real whammy, and what they aren’t telling us.
Obviously, they will be tightening Canada’s monetary policy and reducing the number of dollars available in the market.
THe debt is still going to be $1.2 trillion dollars and there will be less dollars available to pay for it.
I wonder if their position has anything to do with the BoC legislation that was recently introduced in Canada’s Parliament....
What else can be done to return to the Trump economy?
It wouldn’t surprise me if they were looking for a way to euthanize people to control costs.
Solid Friedman monetary policy is the only way out.
However, it will devastate the economy more than what we are already experiencing.
The debt cannot just be written off,
We are heading for 1930’ depression, possibly worse and there is nothing you can do about that, except prep for it. Get your personal inflation under control by buying your food and clothes in advance and you might get through it better than most.
True. Oh so true.
Private debt basically caused Black Friday, October 29, 1929. I strongly believe public debt will cause an even worse crash. And soon
It is private and public debt.
Each % of an interest hike raises our debt servicing costs for the national debt. Currently, we are spending over $300 billion a year on $22.3 trillion of publicly held debt.
Last year, the Congressional Budget Office (CBO) projected that annual net interest costs would nearly triple over the 2022 – 2031 period, soaring from $306 billion to $910 billion and totaling $5.4 trillion over that period. However, inflation has been much higher than CBO’s projections and the Fed is raising interest rates earlier than the agency projected last year, so such costs may rise even faster than anticipated. For example, interest costs in 2021 were around $20 billion higher than the agency projected last year, and such costs through the first six months of this fiscal year have outpaced the same period a year ago by $42 billion.
The growth in interest costs presents a significant challenge in the long-term as well. According to CBO’s latest projections, interest payments would total around $60 trillion over the next 30 years and would take up nearly one-half of all federal revenues by 2050. Interest costs would also become the largest “program” over the next few decades — surpassing all discretionary spending in 2043, Medicare in 2043, and Social Security in 2045.
and Trudeau secretly sold off Canada’s Gold Reserves to China
It’s what banks in the US did back during Carter’s Gasoline shortage stagflation misery index back in the 70s. They pushed rates up to the higher teens and never really went back down.
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