XPost: can.internet.highspeed   
   From: Canuck57@nospam.com   
      
   Some Guy wrote:   
   > Canuck57 wrote:   
   >   
   >>> You will not see inflation here unless the Bank of Canada raises   
   >>> interest rates.  The bank rate is currently 0.25%.  A historic   
   >>> low.   
   >> That is not how it works.  Interest rates are meant to shore up   
   >> currency value.   
   >   
   > I don't know if you've noticed lately, but all countries are right now   
   > in a race to the bottom when it comes to currency values.  Nobody wants   
   > to have a high-value currency at the moment, because it kills exports,   
   > and exports = jobs.   
      
   Most, yet.  But not all.  But it is also why gold is selling.  That   
   immutable metal will retain value on currency depreciation in at least   
   much better than a CD/GIC/Bond or savings account.   
      
   > So nobody wants to "shore up" their currency right now.  Least of all   
   > the US.   
      
   Agreed.  Government wants inflation for two very important reasons.  And   
   it is why you would be a fool to lend government money:   
      
   - hyper-stagflation makes it less likely people toss the keys to the   
   bank, making homes ever more expnsive in the long term.   
   - eventually i will mean more taxes, taxes on $1/lire isn't as good as   
   $2/litre.   
   - devalues massive government debt, 100% inflation emans a $1000   
   government bond will buy half as much as before, and governemnt will   
   find it much easier.   
      
   I agree, don't watch our leaders lips on this one, tey want   
   hyper-stagflation.   
      
   >> By the time rates go up, the inflation is in the system   
   >   
   > There is a lot of talk about printing money and the spectre of   
   > inflation.   
   >   
   > So far it's all just hot air.   
      
   It always lags.  As prices are "depressed" it works, but it is like   
   holding water back on a beaver damn.  Sooner or later, somehow the damn   
   will break and it will come.  At some point prices will stop depressing   
   and shortages will occur.  At that point the system has lost elasticity   
   and inflation will pass through.   
      
   Already happening if last months US numbers are correct.  Higher GDP   
   with elss workers and less wages means prices increases are coming into   
   the supply chains.  If they cannot be passed on, then more economic   
   reductions will occur.   
      
   > The truth is that right now, cash is valuable because nobody wants to   
   > lend it - people and banks are hoarding it.  Banks are making money on   
   > overdraft and other bank charges.  They don't need to piss money away on   
   > low-interest loans, lines of credit, etc.  Lots of people got out of the   
   > stock market and into cash for the past year - or 5.   
      
   True.  But don't follow the herd.  Just like a buffalo jump.  The herd   
   too was in the market Sept/Oct 2008....   
      
   >> Take US numbers, GDP up 3% but with unemplyment up to 22% that   
   >> means fewer people working and less being produced, but the   
   >> costs of the goods is higher.   
   >   
   > The cost of goods is *higher* ???   
      
   If the currency goes down in value (inflation from currency), and goods   
   are more or less "world" priced, the cost of the goods is more, yep.   
      
   > On what planet?   
      
   This one.   
      
   >> That is real inflation in the pipeline.   
   >>   
   >> Lets ahve this conversation in 3 months, if it holds you will   
   >> understand more of the effects.   
   >   
   > Consumer prices will be the same, or slightly lower 3 months from now.   
      
   Only if the elasticity in the pricing exists to do so.  For many items   
   like food and necessities it will pass through as inflation.   
      
   >>> The BofC will only raise the rate if they have trouble   
   >>> selling federal debt.  There is no sign of that happening.   
   >> Governments in Canada, including BC, Ontario and Quebec, as well   
   >> as many cities like Toronto and Vancouver haven't been able to   
   >> raise money at all.   
   >   
   > There is (basically) no such thing as municiple bonds in Canada (unlike   
   > the US).  Cities in Canada don't raise money by selling municiple bonds   
   > (I wish they did, because that's what I'd be buying).   
      
   I wouldn't lend ANYONE money unless I was assured of a rate well above   
   inflation and taxes and 100% guaranteed to retain value.  I don't care   
   what form it is.   
      
   As a lender, you have all the risk and almost no rewards.  Credit should   
   be tighter than the crack of a fat ladies ass a sitting.   
      
   >> Ottawa survises only because it can create money.   
   >   
   > Ottawa creates IOU's which it then sells in return for real cash.  If   
   > nobody wants to buy those IOU's, then Ottawa must increase the interest   
   > rate for them until they all get sold.  So far, they haven't had to   
   > increase the rates to sell what they need.   
      
   And as more of that cash makes it into the economy the more is hoarded.   
     But when the hoarding stops, inflation will go nuts and you will see a   
   mini-boom period and inflation will go right with it.   
      
   When the boom ends, the currency value will crash.  As money is   
   everywhere.  Might as well get used to the $1000 bill, it might be   
   pocket change before too long.  As this time, government can't shore up   
   the currency with rates as they are bankrupt debtors themselves.   
      
   >>> The BofC is under extreme pressure to *not* raise rates because   
   >>> that will increase the value of the CDN dollar with respest to   
   >>> the US dollar.   
   >> And if the CDN falls with the USD say 50%, your next litre of   
   >> gaoline might be $2.   
   >   
   > The BofC would love to see the CDN fall to 75 cents US.  Exporters of   
   > ALL types (commodities, oil, finished goods) would also love to see   
   > that.   
      
   Yes, because it means 33% more taxes from commodities like oil,   
   gasoline, steel and even GST.  It also means you will inflationarly pay   
   more for these.  It isn't what is good for the people driving this, it   
   is government greed.   
      
   > If it fell any further, the BofC would raise interest rates, or maybe   
   > even buy up CDN dollars in the forex market by selling USD.   
      
   Perhaps.  But I suspect the USD and CAD will fall together, and looking   
   at the currency charts a little of this has already happened.  US isn't   
   going to raise interest rates any time soon, they too are broke.  1% on   
   $12 trillion is a lot of cash flow.   
      
   >> Bet your wages don't keep up.  Further, want anything like   
   >> steel, rubber, bananas, coffee, they all too will double.   
   >   
   > The price of most things would not rise, because there's too many other   
   > costs (refining, transport, middle-market vendors) that already account   
   > for a good deal of the costs of what the consumer pays, and those are   
   > already priced in terms of the CDN dollar.   
      
   It only does as long as the economy is in active recession.  This cycle   
   is not new.  It is a repeat of 1982 and 1929.   
      
   > If the CDN dollar were to fall overnight to 50 cents US, the most likely   
   > the reason would be a crash of oil prices down to $20 USD.  We'd then be   
   > paying 60 or 70 cents a liter at the pump as a result -  not a buck as   
   > is the current price.   
      
   Not likely.  More like the USD and CAD fall 10% per night together for 5   
      
   [continued in next message]   
      
   --- SoupGate-Win32 v1.05   
    * Origin: you cannot sedate... all the things you hate (1:229/2)