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Thursday, May 21, 2020

Deflation in Canada

The 12-year period of credit disinflation appears to be over as the global economy is finally beginning to visibly deflate despite the best efforts of the central banks:
Canadian inflation went negative for the first time since the 2009 recession after the coronavirus lockdown put the brakes on the world economy.

Consumer prices dropped 0.2 per cent in April from the same month a year earlier, Statistics Canada reported Wednesday from Ottawa. That’s down from a 0.9 per cent annual rate in March and 2.2 per cent in February.

The report adds inflation to the list of economic indicators showing an historic impact from the coronavirus pandemic. Collapsing gasoline prices have pulled inflation lower over the past two months, but weak demand should keep inflation at extremely low levels for an extended period, and could even spur worries about deflation. That will keep pressure off the Bank of Canada to ease up on accommodation efforts any time soon.

From March, prices fell 0.7 per cent, matching the largest one-month drop since 2008.
Deflation is actually good for consumers and the real economy, since their money is worth more, but it is very bad for those who are dependent upon living off the debt of others. Which, of course, is why the banks and the financial elite have been desperately fighting to delay the deflation and credit crash that has been inevitable since 2008.

Debt jubilees are coming. Intellectuals of both the Left and the Right are already calling for them. In fact, one of the primary reasons behind the systemic overreaction to Corona-chan, as well as the constant goalpost-moving concerning the lockdowns, may be the cover provided for the ongoing economic crash.

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53 Comments:

Blogger crescent wrench May 21, 2020 7:18 AM  

Debt jubilees are coming

I look forward to it.

As the inevitability becomes more evident I hope to see as much of my generation as possible take out as much debt as possible on boomer dime to be later forgiven.

The younger you are the more impossible it is to live responsibly while maintaining reasonable income. After decades of squeezing their kids and grandkids like turnips with skyrocketing house prices, spiraling job prospects, and stifling regulation, it's time for boomers to pay the piper.

Blogger peacefulposter May 21, 2020 7:32 AM  

I believe Canada is printing more money per capita than the USA, but it is still not enough to stave off debt deflation.

Blogger Shane Bradman May 21, 2020 7:49 AM  

Steve Keen deserves a pay rise. He's been saying this for decades.

Blogger Azimus May 21, 2020 8:53 AM  

VD:
Debt jubilees are coming


Maybe so. But it almost certainly won't be the next step, but years away after they've tried their entire bag of crazy tricks.

What does history tell us? Has there ever been a significant private debt jubilee in the era of fiat money? I can think of plenty of public debt jubilees (default), in living memory, but nothing comes to mind for what I think you're describing. Sincere question.

Blogger Stilicho May 21, 2020 8:59 AM  

>Steve Keen deserves a pay rise. He's been saying this for decades.<

No he doesn't. His proposed "solution" is replacing private debt with govt debt and putting everyone on the dole in some form. His criticism of our banking system is excellent (see "Roving Cavaliers of Credit" ), but he really hasn't applied his intellect to a better system. He just phones in a socialist solution as an afterthought (see "Debunking Economics" ).

He has a curious blind spot re: govt debt and assumes it would somehow be "managed" for the common good.

Blogger Lazarus May 21, 2020 9:24 AM  

crescent wrench wrote:The younger you are the more impossible it is to live responsibly while maintaining reasonable income.

If you are in Canada, it just got worse.

But food prices rose by 3.4% in April from the year-earlier period, pushed up by demand for staples like rice (+9.2%), eggs (+8.8%) and margarine (+7.9%). On a monthly basis, household cleaning products posted a 4.6% gain.

"Prices for essentials matter more at this stage," noted Josh Nye, senior economist at RBC Economics. "In that sense, an increase in food prices in April likely hurts more than a drop in gasoline prices helps."

Blogger Up from the pond May 21, 2020 9:38 AM  

@4

"Sincere question."

Blogger Unknown May 21, 2020 10:17 AM  

Keep your eyes on Southern Africa.

Blogger d May 21, 2020 10:27 AM  

Before debtors get too happy, the debtees will do whatever they can to acquire titles from their debtors before the jubilee. So, bankrupting the debtors becomes the only play there, no?

Blogger Jack Ward May 21, 2020 10:41 AM  

""In that sense, an increase in food prices in April likely hurts more than a drop in gasoline prices helps."

And, yesterday, there was a 19c per gallon rise on regular at the pump. Where I live. Will be out and about later; can't wait to see where it is now. Whatever has happened I suspect Trump and company and the oil industry are ecstatic.
Debt jubilee? Well, in such uncharted territory I can only expect the worse. What I'm thinking now is what happened to the Trump team the last 3 months? Come Nov. 3, unless some very dramatic things happen, things may get very worrisome come Nov 4-5th. If Trump loses or even if he wins, I could foresee military coup, armed patriots finally realize the time has come, the worse scenarios that zombie novels have played on. Or, all the above.
What causes some mirth is that the so called progressives, our 'betters' and certainly richer, think that New Zealand and places like that are their refuge. If they think that and the US military gets involved per their original oaths to protect against enemies foreign and domestic, well, anyone ever heard of neutron bombs? Bueller?

Blogger Dont Worry About Me May 21, 2020 10:48 AM  

Following up deflation with anti-usury laws would be great

Blogger John Rockwell May 21, 2020 11:30 AM  

Banker: Nooooo. Not our Usurinoooos.

Normal People: Haha Debt Jubilee go brrrrr.

Blogger John Rockwell May 21, 2020 11:32 AM  

Azimus wrote:VD:

Debt jubilees are coming


Maybe so. But it almost certainly won't be the next step, but years away after they've tried their entire bag of crazy tricks.

What does history tell us? Has there ever been a significant private debt jubilee in the era of fiat money? I can think of plenty of public debt jubilees (default), in living memory, but nothing comes to mind for what I think you're describing. Sincere question.


Only Ancient Mesopotamia did this consistently. The King raising his torch which announces the Jubilee at the beginning of his reign.

Blogger tuberman May 21, 2020 11:46 AM  

"Debt jubilees are coming

I look forward to it."

Me also, and not for my sake.

Blogger Joe Smith May 21, 2020 12:13 PM  

@Azimus I didn't start to think that maybe your questions weren't sincere until you had to tell us they were definitely sincere.

Blogger Reprehensible Adam May 21, 2020 12:15 PM  

Gas prices went up to 89.9 cents a litre today in Alberta . I guess it’s because more oil is needed for planes and other commercial stuff.

Blogger Rick May 21, 2020 12:29 PM  

The practical way to debt jubilee may only be incrementally. I think that’s what the GE is already doing. Recent examples of getting John Q Public warmed up to the idea:

The admin recently forgave student loans for disabled veterans (brilliant - who could be against that).

Admin recently placed automatically student loans in forbearance for 6 months, no penalties or interest during this time. Pot just got warmer. Something similar was offered for home mortgages (3 months I think, and you had to show your income was affected by COVID etc.)

The hundreds of billions of dollars in the CARES Act PPP “loans”, 100% of which can be forgiven. FORGIVEN. All you have to do is use it for payroll and 25% of some other qualifying expenses.

There’s gotta be a lot of boomers in there and plenty of berny voters.

If jubilee makes sense to the GE, he’ll do it. No matter whose idea it was.

There were some Dems who mentioned student loan forgiveness. But they wouldn’t know how to pull it off.

Anyway, VD said to look for signs. I think those are signs.

Blogger J Van Stry May 21, 2020 12:33 PM  

Serious question, Vox: If there is a debt jubilee, what kinds of debt do you think will be forgiven?

And will those debts be completely forgiven? Or just a portion of them?

The only debt I'm carrying is a mortgage that I'm hoping to pay off in a year or two. I'm wondering if I should slow down that payoff and invest those funds in something else, like more property.

Blogger Damelon Brinn May 21, 2020 1:11 PM  

Around here, it seems like the stimulus payments are preventing any run of people or businesses selling stuff cheap to get spending money, which would push prices down. For now. It'll be interesting to see what happens when we have a few months' worth of estate sales and garage sales all trying to catch up at once when they're allowed to operate again. I'm hoping to score some deals with the cash I'm hanging onto.

Blogger Shane Bradman May 21, 2020 1:20 PM  

Debt forgiveness is not replacing private debt with government debt. But to your point, government debt is much better than private debt. Private debt destroys the family and kills the future.
Steve Keen is the only economist I have seen that has suggested going backwards and rethinking our ideas from scratch, and proposed physiocracy as the new starting point. This is the most competent suggestion from a living economist.

Blogger Shane Bradman May 21, 2020 1:24 PM  

J Van Stry, debt forgiveness should forgive all debt, but starting with private debt if there is any need to do it in phases. The entire debt will be forgiven, because forgiving 50% of the debt doesn't make sense.
Don't take financial advice from strangers, but if I were in your position I would focus on becoming debt free.

Blogger tuberman May 21, 2020 1:28 PM  

"Gas prices went up to 89.9 cents a litre today in Alberta . I guess it’s because more oil is needed for planes and other commercial stuff."

Naw, it's due to Castro's son.

"The practical way to debt jubilee may only be incrementally."

Yes

"... student loan forgiveness."

Likely the start, expect a solid percent of colleges to go under some time after.

Blogger 7916 May 21, 2020 1:39 PM  

With the idea of debt jubilee's inevitability in mind do not go on a debt splurge. You can never know the timing, or what the retaliation might be. Debt is still a ball and chain that makes taking the ticket that much easier.

Paying off your debt is still a good thing. Not going into debt is still a good thing.

Blogger Patrick Kelly May 21, 2020 1:55 PM  

I know a millennial who was able to use his c19 relief unemployment bonus and stimulus payments to pay off a student loan, and will likely be able to pay down more debt now, getting his own partial debt jubilee.

Blogger Vaughan Williams May 21, 2020 2:03 PM  

After a good run at 88 cents a litre, gas is ranging between 102 and 110 cents on the Canadian coast. So, something has changed. It is still a lot better than the 138 cents it was at for the past few years. Nice to be able to drive around with a full tank for once. To make a couple more jaunts per week. To visit friends and family who live an hour away, more than once a year.

Blogger One Deplorable DT May 21, 2020 2:09 PM  

Debt jubilees are coming. Intellectuals of both the Left and the Right are already calling for them. In fact, one of the primary reasons behind the systemic overreaction to Corona-chan, as well as the constant goalpost-moving concerning the lockdowns, may be the cover provided for the ongoing economic crash.

There are a lot of things which are driving me nuts about the world's covid response and the impact it has had on my own life as well as those I know personally. I have to keep reminding myself that some very good things may ultimately come of it all. A slow down to immigration. The return of some industry to the U.S. Some form of debt forgiveness and possibly a needed reset of the financial system. I have to keep reminding myself that God works in mysterious ways.

Here's praying that though men may try to use this incident for their evil plans, God will twist and foil their plans to bring about those things which are good.

Blogger Vaughan Williams May 21, 2020 2:10 PM  

@6 Lazarus, it is worse than just food prices. There was a brief blip where you could get food insanely cheap, but it lasted a week. Meat that normally went for $6/pound going for $1/pound, etc. The big worry is this winter. I've been talking with farmers local and far off. Last years disaster is being repeated, plus animal feed is being strictly rationed. Local pigeon racers have quietly got the word and are already culling their flocks heavily or getting out entirely.

Canned goods have too much sugar and other wierd stuff in them. Highly recommend dry grains, dry beans, lentils, and split peas, salt, herbs and spices that will last. If I'm wrong, you'll have food you can eat for years to come and it will still be nutritious and tasty. If I'm right, you'll have a lot less stress than your neighbors.

Blogger Unknown May 21, 2020 2:14 PM  

What if the debt forgiveness *is* the ticket?

Blogger Nathan Hornok May 21, 2020 2:15 PM  

How is bad if the money you have can now buy more stuff? Yet for some reason people just blindly accept the dogma that deflation is bad. It's one of the most blatant "2+2=5" false beliefs that there is.

Blogger One Deplorable DT May 21, 2020 2:16 PM  

@22 - Likely the start, expect a solid percent of colleges to go under some time after.

So there are two major benefits to student loan forgiveness. What are we waiting for?

Blogger Azimus May 21, 2020 2:16 PM  

@ Joe Smith - when did we kill off the word sincere? Maybe I should've said "serious question" or "hands up don't shoot"... I'm not hiding anything behind my back, I was simply asking if in the fiat money era this has ever happened. I had one idea that when European Universities went to a free system that the gov would've forgiven debt holders since they seriously degraded the market value of their career, but I couldn't find anything at all on that and had no more ideas. SDL will no doubt agree that history is an excellent predictor of the future at least in terms of bracketing likely scenarios. I've been on this blog 15 years, or whatever year I read Gibbons Decline and Fall...I think if I was a gamma, or at least disingenuous it would've come out by now.

Blogger sammibandit May 21, 2020 3:12 PM  

Normally on May long weekend gas here expensive. May last year was $1.22. It always has gone up for this weekend and stays high for the vacation months. September of 2019 was about $.95. I just did a spot quote on gas and it's about $.80. Fantastic.

All prices are per litre in Canadian Dollars. I live in the best province.

As a side note a guy in a big truck had a mishap at the pump had extra gas so he gave me 10 litres. Never had that happen until this past April. The mood is better.

Blogger L.Fairchild May 21, 2020 3:21 PM  

Western Canadians are restless, especially millenials & zoomers. Western separation sentiment is resonating with almost everyone I talk to. Of course, I live in the central interior... The only Canadians who voted red this past election on this side of the country are the lower mainlanders. House prices have skyrocketed in my town, where only 6 or so years ago they were so affordable that an average mortgage was less than rent. Grocery prices keep going up. Everything feels like it's on a brink. I don't know anything about economics but I just feel in my gut that it wouldn't take much to get the western people to rally behind a big change.

Blogger Skillet May 21, 2020 4:51 PM  

My buddy used his stimulus check to buy some chickens. He got money for nothing and his chicks for free-

Blogger Canadian Warlord May 21, 2020 4:54 PM  

Don't Worry About Me;
"Following up deflation with anti-usury laws would be great"

The insane media in Canada has been prepping us for sharia law now for years, I call their bluff. I want it for one day. All usury gone.

I don't care what happens after that, this country will not last much longer. Though it does appear we will outlive South Africa.

Blogger Canadian Warlord May 21, 2020 7:36 PM  

L.Fairchild,

Western Canadian here. From North BC, 59th parallel. I roam constantly (north and south), about to move again. The city people are border clingers. A contractor up from Atlanta once told me, "People from Ontario... yankees." He liked being as far away from the 49th parallel, in either direction. Similar cultures, pastimes, we just have more queens garden to tromp over with machines.

The big shame of Chile, is that it's such a long country on the map with so short a name. Split it up a bit, "L'Etatos Unitos de Chile." The break-up of Canada gives a chance to change that trend. The thin, long strip of south Canada will be named, "Female Genital Mutilania."

Blogger Akulkis May 21, 2020 7:38 PM  

"And, yesterday, there was a 19c per gallon rise on regular at the pump. Where I live. Will be out and about later; can't wait to see where it is now. Whatever has happened I suspect Trump and company and the oil industry are ecstatic."

Don't know how Trump would feel about it, as he was using the low price of petroleum (down to -$40/barrel) to restock the strategic petroleum reserve.

In general, it's a good thing. It means the oil companies aren't over-producing any more -- there's enough fuel consumption to actually reducing the amount of petroleum sitting around in storage. We were in danger of all storage capacity filling up.

Blogger Brett baker May 21, 2020 8:04 PM  

A lot of folks forget that debtors get hurt even worse than debt holders in a lot of deflationary situations. Unless there is a jubilee.

Blogger SirHamster May 21, 2020 8:17 PM  

John Rockwell wrote:Only Ancient Mesopotamia did this consistently. The King raising his torch which announces the Jubilee at the beginning of his reign.
When the god-emperor ascends to his cherry blossom throne.


Unknown wrote:What if the debt forgiveness *is* the ticket?
Debt is slavery. Taking the ticket makes you a slave to the system. Debt forgiveness is the exact opposite of slavery.

Blogger the other boomer May 21, 2020 9:31 PM  

Deflation is also bad for producers who are in debt. Lincoln inflated the currency to finance his war, and when Republicans after the war deflated, it hurt farmers etc. who had borrowed to increase production. They may have been unwise, but they weren't living off the debt of others. This led to Bryan's call for free coinage of silver and the "Cross of Gold" speech. He was popular with farmers, ranchers, and miners in the West and South, while the bankers supported to Republicans, who kept the value of dollars owed to the bankers high and increasing. Of course the deflation was also good for people who were payed a steady wage and people who held dollars that would go up in value.
Debt cancellation would have helped the indebted small farmers even more than free silver.

Blogger Joe Smith May 21, 2020 9:39 PM  

@Azimus I didn't say anything about the SSH. It's the same as "no homo". I wasn't thinking homo until the guy brought it up. The assumption is that a question is sincere unless there's some reason to believe it isn't.

Blogger Gracie May 21, 2020 10:05 PM  

I will tell you that Corona-chan is gonna be good for my husband's pizzeria/catering biz. A good portion of the PPP gets forgiven if you manage it correctly. He will be paying off as much biz cc debt as possible. 6 months ago I would have told you the biz was done. God's ways are mysterious.

Blogger Unknown May 21, 2020 11:01 PM  

Wow! this is Amazing! Do you know your hidden name meaning :D I just found out my name meaning from this website, what is your name meaning xD

Blogger Nihil Dicit May 21, 2020 11:50 PM  

Likely the start, expect a solid percent of colleges to go under some time after.

Most college sports program, even the big uns, are in serious trouble already: teams getting axed, coaches banjaxed, future schedules chopped.


do not go on a debt splurge. You can never know the timing, or what the retaliation might be

This. Don't get into the fool's game of trying to call the top of the market, and never underestimate the ability and willingness of the bankers and their minions to make any "jubilee" a phenomenally painful experience. Just look what they've done to the far less palatable current option of bankruptcy.


The insane media in Canada has been prepping us for sharia law now for years, I call their bluff. I want it for one day. All usury gone.

The "no usury" bits of sharia are, like the "shared sacrifice" bits of communism, only for the poors. Our "American" sheiks are unlikely to be any different.

Blogger The Observer May 22, 2020 3:24 AM  

The insane media in Canada has been prepping us for sharia law now for years, I call their bluff. I want it for one day. All usury gone.

That doesn't really work, as mentioned above. Islamic banks just play the game of calculating what you would have paid under compound interest, summing that up, and calling it a "fee" for lending. Tada, no usury.

Blogger xavier May 22, 2020 5:42 AM  

I wish it happen 20 years ago when I was paying for my student loans. No matter I'll be able to buy property at reasonable prices

Blogger Brett baker May 22, 2020 6:03 AM  

+1

Blogger crescent wrench May 22, 2020 8:22 AM  

7916 wrote:With the idea of debt jubilee's inevitability in mind do not go on a debt splurge. You can never know the timing, or what the retaliation might be. Debt is still a ball and chain that makes taking the ticket that much easier.

Paying off your debt is still a good thing. Not going into debt is still a good thing.


You ask the impossible of anyone younger than 40. Maybe the top 3-5% could, the rest are saddled with every negative externality of boomer policy for the past 3 generations.

Blogger Off The Wall May 22, 2020 8:40 AM  

Price of gas is still pretty low in Canada compared to historic values, but has increased 50% from the April lows. Everything else is expensive.

Blogger L.Fairchild May 22, 2020 1:02 PM  

Canadian Warlord wrote:L.Fairchild,

Western Canadian here. From North BC, 59th parallel. I roam constantly (north and south), about to move again. The city people are border clingers. A contractor up from Atlanta once told me, "People from Ontario... yankees." He liked being as far away from the 49th parallel, in either direction. Similar cultures, pastimes, we just have more queens garden to tromp over with machines.

The big shame of Chile, is that it's such a long country on the map with so short a name. Split it up a bit, "L'Etatos Unitos de Chile." The break-up of Canada gives a chance to change that trend. The thin, long strip of south Canada will be named, "Female Genital Mutilania."


59th parallel? And here I thought living in the 53rd made me a northerner. I agree with your Chile sentiment - Countries that are too long/too big are quite illogical, considering the vast cultural differences that develop regionally. Canada is too big to be managed properly as it stands.
I'm very happy to make my life's goal carving out a small piece of rural land to be as productive as possible for my future children, so if the politics never change I'll be alright. But if some kind of upheaval happens here, which seems likely, I hope the northwest declares some form of self governance.
Those city folks living in their overpriced sardine cans can have the border.

Blogger Ominous Cowherd May 22, 2020 9:28 PM  

59th parallel? Ya'll Canadians are southerners.

Blogger Snidely Whiplash May 23, 2020 3:53 PM  

You want to know where deflation is going to come from?
https://www.zerohedge.com/personal-finance/where-you-can-buy-hertz-cars-huge-discounts

Blogger kurt9 May 23, 2020 6:19 PM  

Some more deflation for you: https://www.hertzcarsales.com/used-cars-for-sale.htm

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