I don't disagree, it is an interesting problem that many countries in the world are all going to have to solve. Just funny to see many different places experiencing the same issue and then point to *current leader where you live* and shake your fist.
Things are going to change more and more as our demographics continue to substantially change from how they were in the past as many of our systems rely on that normal pyramid structure.
I don't disagree, it is an interesting problem that many countries in the world are all going to have to solve. Just funny to see many different places experiencing the same issue and then point to *current leader where you live* and shake your fist.
Things are going to change more and more as our demographics continue to substantially change from how they were in the past as many of our systems rely on that normal pyramid structure.
Fair enough but it wasn’t like other parties were not sounding the alarm earlier. This was from 2020.
Given the increasing demands put on public finances as the population ages and health care spending climbs further, I’m not optimistic we’ll avoid a debt crisis in the coming decades.
Something like modern monetary theory could theoretically solve some of these issues, but governments can't seem to wrap their heads around not involving middle-men (banks/lenders, etc.).
Something like modern monetary theory could theoretically solve some of these issues, but governments can't seem to wrap their heads around not involving middle-men (banks/lenders, etc.).
Well yeah, if we could just run-up consequence free debts, it would all be fine. But that's one of the enormous questions with MMT. That, along with whether fiscal policy is a better answer to challenges than monetary policy and with that whether governments are better to control these issues than central banks. It's not a surefire solution at all, and it's not just because of banks.
Possibly, but I thought that about the NDP and was sadly disappointed, Canadians are Liberal in their hearts, give them the slightest excuse and they will vote for Big Red again, whether that's a good idea or not, they are comfortable with a center leftish Liberal Party doing not much at all and hoping it all works out ok
I’m not sure this time. The last two elections were close, with two uninspiring CPC leaders. PP is much more inspiring, for a certain segment of the population, and has a better head start.
My guess is Canadians give him a tryout, but on a short leash, like they did Harper.
Up until a few years ago whenever the subject of ballooning debt was brought up around here the regular posters would say that now is the time to "invest" since interest rates are so low. Who would have guessed that if you never plan to pay back that money that interest rates will eventually go back up?
Trudeau: “We have always exercised fiscal restraint.”
Got to give him credit for being able to say that with a straight face.
Up until a few years ago whenever the subject of ballooning debt was brought up around here the regular posters would say that now is the time to "invest" since interest rates are so low. Who would have guessed that if you never plan to pay back that money that interest rates will eventually go back up?
Trudeau: “We have always exercised fiscal restraint.”
Got to give him credit for being able to say that with a straight face.
Motivated reasoning. If you’re running up huge budget deficits in an extremely low interest rate environment, you’re going to convince yourself that interest rates are going to stay rock-bottom forever. And voters have to share some of the blame. It’s not as though we say no to the goodies that governments bribe us with. When people are routinely taking out 7 year loans for new cars, you know cultural anxiety around debt has pretty much vanished. It will be interesting see what a few years of prime rates higher than 5 per cent will do to attitudes around debt.
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If this day gets you riled up, you obviously aren't numb to the disappointment yet to be a real fan.
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It will be interesting see what a few years of prime rates higher than 5 per cent will do to attitudes around debt.
We're headed toward the 80s/90s all over again. People are going to say "Who could have anticipated this?" while the warnings have been there for most of a decade. When Trudeau was elected on a promise to unbalance the budget (no more than 30 billion) people thought that was a great idea and rewarded him with reelections, probably the same people swimming in personal debt.
It’s a problem in all aging, mature democracies. The costs imposed by public programs - especially health care - rise relentlessly while productivity stagnates or declines. Voters resist higher taxes. And politicians have little incentive to look beyond the next 4 or 6 years. Add an increasing cultural tolerance for debt in private as well as public life, and it’s really hard to see how fiscal sobriety will be restored before we suffer a major crisis.
While I agree that private debt is very high right now, I think that the 1990s and late 1980s were abnormal for how low private debt was.
Going as far back as fur traders, most (read nearly all) families working for the HBC owed 98% of their pay check to the HBC by the time they were due for pay. Consumers spending nearly all of their money is as old as the hills.
in the 1910's farmers in the west were hammered by debt to afford machinery and enough land to make the machinery worth it. Personal debt was even crazier then because personal loans were allowed. That said, people had something to back their money up be it machinery or land. *
These days, people are in enormous debt without owning anything that holds liquid value. Some folks rent, drive a beater and still carry around 8 grand in debt. its money that cannot be recuperated. These people couldn't borrow money 100 years ago, or if they did they would be thrown into debtors prison after the first $1000 they couldn't pay back.
*just a foot note this isn't so simple, this contributes in some way to massive deflation in the 1930s.
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We're headed toward the 80s/90s all over again. People are going to say "Who could have anticipated this?" while the warnings have been there for most of a decade. When Trudeau was elected on a promise to unbalance the budget (no more than 30 billion) people thought that was a great idea and rewarded him with reelections, probably the same people swimming in personal debt.
Who am I kidding, they'll blame it all on Covid.
Naw, some guy named Harper.
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He did kind of #### us when he cut the GST, knowing full well no government can raise it and survive, which means we'd be forced to make cuts. We elect these people to make responsible decisions, and that is one that has really hurt our ability to fund services.
Is that along the lines of what you were thinking?
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My concern is with the level of overall debt levels across the board. The level of consumer, corporate, government debt is outstanding. Take Alberta for example, where I believe we hit approx $100 billion in provincial debt when as recently as 2004, less than 20 years ago, we were virtually debt free. I believe the current debt is approx 80 billion now. The servicing costs are sky high on that debt which takes away from funds to fund operations.
We have gotten away from basic fundamentals when it comes to finance for everybody. Everybody got addicted to cheap financing and spending when interest rates were virtually 0%. Now the piper needs to be paid. In my group of friends in their 30's and 40's, it used to be a pissing match as to who's house was worth more. Typical guy stuff. I would always say, when interest rates go to historic norms, it will hurt. Low and behold now, there is little bragging but extreme concern with mortgage renewals, ballooning payments and legit concern about making ends meet, despite earning significant income.
Although central banks may be able to lower rates in the future to stimulate growth, that just involves more borrowing for everybody in order to do so. That trick has been played for far too long, we all got addicted to it and it's going to cause more pain. Rate's aren't even at "historic highs", they are actually probably below average. What happens if and when rates hit 9, 10, 14%?
That is how we have average Joe's living in a home worth 1 million, driving a luxury car, with $1400 iphones, earning 6 figures yet struggling to pay bills and put a $90 prime rib on the table.
In a lot of "poor" countries where they don't have access to credit as easily, they retire with a 50% savings rate, living in basic accommodations, have multigenerational homes so that the grandparents can look after children while the parents work.
I think the system is a lot more fragile than a lot of people would like to admit and it's kinda scary.
Sorry, Curves.
My point wasn't that this issue isnt scary or coming (it is), but merely the blame cannot be wholly placed on the Central Bank to solve the crisis given their limited abilities to do so. (not to say CB is not to blame, but there was certainly pressure from Government's to follow the race to the bottom that existed).
We are 100% running into an issue in the future and no government, regime, or ideology has done anything to curtail the spending issue or prepare for it's inevitable conclusion.
EDIT:
Truthfully, I don't think the CPC, LPC, or NDP have any plans to deal with this issue. Each one of these parties will be racking up debt into the future; and if we luck out and get a budget surplus, i don't trust any of the governments to actually pay down the debt in any significant way vs using the money to continue to buy votes (through tax cuts or increased spending).
Last edited by Cappy; 11-21-2023 at 11:06 AM.
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He did kind of #### us when he cut the GST, knowing full well no government can raise it and survive, which means we'd be forced to make cuts. We elect these people to make responsible decisions, and that is one that has really hurt our ability to fund services.
Is that along the lines of what you were thinking?
No government can raise it and survive? The very next majority government implemented the Carbon Tax with a ton of voter support.
Harper was many things Canadians don't want to associate with but he was also tidy on his overall numbers.
Trudeau wasn't left a financial mess to deal with but now for the 2nd time in millions of peoples lives a Trudeau will leave their successor a financial disaster that'll take years and years to handle. Let's not forget why the GST was implemented in the first place.
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I don’t believe that a PM regularly takes weekends off. It’s a 24/7 job, like it or not.
That said, people are complaining about the PM’s salary of $379,000 and days off? Pierre Poilievre will collect (I refuse to use the word “earn”) $279,900? He flies around the country, campaigning for an election two years out, slamming Trudeau at every opportunity. It’s right out of the GOP playbook.
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No government can raise it and survive? The very next majority government implemented the Carbon Tax with a ton of voter support.
Harper was many things Canadians don't want to associate with but he was also tidy on his overall numbers.
Trudeau wasn't left a financial mess to deal with but now for the 2nd time in millions of peoples lives a Trudeau will leave their successor a financial disaster that'll take years and years to handle. Let's not forget why the GST was implemented in the first place.
Well if you're giving Harper a pass for the spending during the GFC, then surely you realise that the spending through Covid is a major factor for Trudeau, right?
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All we have to do is look at the government right here in Alberta to see how a conservative government is fiscally responsible and holds itself accountable for it's own mistakes and doesn't blame everyone else, right? If that doesn't convince you, try Ontario, then go back in time to when Harper ran the tightest ship around
Canada’s finance minister, Chrystia Freeland, will provide a fiscal update next Tuesday. It will not be pretty.
In fact, the monthly interest costs of the federal government are now at an all-time high. The latest available data for August shows federal interest costs exceeded $4.3 billion, surpassing the previous record of $4.03 billion set in December 1995. It’s more than double the pre-COVID amounts, as I illustrate below. And it’s the fastest acceleration in interest costs in recorded history.
And if rates stay higher for longer, as many (including the Bank of Canada) now expect, the government’s debt levels may not be sustainable.
Federal debt that grows faster than the economy is not sustainable. If the fiscal update shows that, alarm bells should ring.
What can Canada do? As I’ve noted before, sticking with the government’s own previous plans would be a good start. Ratcheting up spending plans with every single budget is an important reason why we’re in this situation. Looking ahead, those seeking to replace the current prime minister—whether within the Liberal Party or Pierre Poilievre of the Conservatives—should start considering options.
Well if you're giving Harper a pass for the spending during the GFC, then surely you realise that the spending through Covid is a major factor for Trudeau, right?
Covid isn't the reason we're in trouble. The out of control spending was already happening before we even knew what Covid was. $100B deficit before the pandemic started.
I'm not giving anyone a "pass", I'm saying for the 2nd time in my lifetime and maybe yours too a Trudeau took a massive dump on the economy and left the next guy to clean it up. Maybe it's a coincidence that the next guy is always a conservative but likely isn't.
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