Amongst the news of the bailouts to the economy in the United States, the Bank of Canada snuck in an additional bailout of the economy. That is resulting in the devaluation of the Canadian Dollar along with the US dollar.
In the federal Leaders’ English debates this past week Green Party leader Elizabeth May said that the Canadian Dollar should be worth $0.80 US to stimulate our economy and as that makes sense from a manufacturing jobs standpoint of does not in the big picture.
We can choose to not elect May. However, we have no say as to the Bank of Canada officials. There is a reason why the EU is banning the four largest EU states from this plan. It only allows more money to be borrowed and spent, money that can not be afforded to be paid back.
It is true there is an overvaluation of real estate prices in Canada but when you borrow $750,000 for a house that drops when the bubble bursts to $225,000 and you have over $600,000 left to pay it makes more sense to default and buy a different house. This is what will happen in the next 5-10 years and there will be no amount of bail-out money that can save you then.
This free money is what I causing the prices of everything to go up if you add more money to the economy this will happen. There is not the option at this point either to add a sales tax to control the inflation like former PM Brian Mulroney did in the 1980s since all that is keeping the economy afloat is the unnaturally high rate of spending that has to increase at a faster rate than the rate of inflation bit can’t ever stop, or we will be stuck between a rock and a hard place.
In closing, we refer back to the old saying that money does not grow on trees.