Good news about the CEWS

[Launchpad1]

Looks like the CEWS is extended for sure until summer 2021:

https://betakit.com/canada-emergency-wa ... -expanded/

[AuxBatOn]

Looks like the CEWS is extended for sure until summer 2021:

https://betakit.com/canada-emergency-wa ... -expanded/

Old news. That was part of the Speech from the Throne. Once we knew the NDP supported the Speech, it was a done deal.

[Launchpad1]

Oh yes I know, it's just that since Friday now we know the details.

[DHC-1 Jockey]

But it looks like the CEWS is dropping from 75% to 65%.

From your article:

The extension of CEWS follows a promise the Liberal government made during its Throne Speech. In addition to extending the subsidy to June 2021, the government also made updates to the program. Freeland stated the government is freezing the wage eligibility at 65 percent until December 19th.

[Launchpad1]

Yep it looks that way. I guess it stays at 75% for October then drops to 65% until December. Could be worse.

['97 Tercel]

Try to have cash in the bank by about 2023 - the interest rate on it will prob be about 15%

A hidden tax (aka big inflation) is coming our way. Someone has to pay for all this vote-buying.

[iflyforpie]

What inflation?

Inflation is from excess liquidity. This is quite the opposite. Expect deflation as corporations compete for cash-strapped consumers and people put off large purchases and hoard cash until a semblance of stability returns.

['97 Tercel]

"Though it seems like deflationary end times to some right now, the COVID-19 scare is going to pass, and we will be left with monetary and fiscal bazookas having been fired," worries market analyst Gary Tanashian on the site Seeking Alpha.

Once a government has started pouring stimulus money into an economy, it is notoriously hard to start pulling it back out again, especially, as in the U.S. case, during a presidential election year. Similar forces will be at work in Canada where, because of the Liberal minority government, an election could happen at any time.

Tanashian suggests the inflation is already happening now, but is disguised by the temporary COVID-caused crash in demand. And once the lockdown begins to lift and everyone roars back to working and shopping and eating out, there will be too many dollars chasing too few goods and services. And that's the classic definition of inflation, which he sees showing itself by the end of 2020, and surging over the next two years.

If we do see a return to inflation, it's hard to predict how it will play out. But central banks likely will start raising rates to keep it in hand.

https://www.cbc.ca/news/business/pittis ... -1.5521267

[altiplano]

Never mind the devaluation of our Canadian ruble...

[Inverted2]

Hope it doesn’t get too devalued like Zimbabwe.

[PeterParker]

Please stop with the Neoliberal bullshit.... The US has been running trillions of dollars of deficit for nigh on two decades now and they haven’t crashed their economy... (yet...)

https://thewalrus.ca/why-canada-wont-go-broke/

[Air.Field]

• The US is backed by one of the largest gold reserves, Canada is not.

• The US economy, even now, is more robust than Canada.

• According to the International Monetary Fund, the US dollar is the most popular. As of the fourth quarter of 2019, it makes up over 60% of all known central bank foreign exchange reserves. That makes it the de facto global currency, even though it doesn't hold an official title. Canada's dollar is nothing.

[iflyforpie]

• The US is backed by one of the largest gold reserves, Canada is not.

• The US economy, even now, is more robust than Canada.

• According to the International Monetary Fund, the US dollar is the most popular. As of the fourth quarter of 2019, it makes up over 60% of all known central bank foreign exchange reserves. That makes it the de facto global currency, even though it doesn't hold an official title. Canada's dollar is nothing.

The United States would run out of gold on the 30th day of funding government expenditures with it. It represents a mere 1/3 of their annual budgetary deficit, and also only just over 1/3 of the T-Bills that just China owns.

Canada used to have a robust economy when things like appurtenances required resources to be processed locally in job creating value-added operations and royalties were higher and used to build a sustainable legacy. Today.. raw product is taken out and shipped overseas with royalties and taxation—for oil, for example—being lower than that of Nigeria. But Canada’s economy has many facets and outside of oil and airlines and service industries many are doing quite well. The US has always been the mine canary for any global recession. 09 hit it a lot harder than it hit us, and quite likely it will get hit even harder as partisan bickering over relief and a controversial election will kill consumer and investor confidence. The stock market is not the economy, and US per capita debt and debt to GDP ratio absolutely dwarfs Canada’s.

Whether a currency is used in global exchange means absolutely nothing. Go pay for something with dollars vs local currency in any other country and you’ll get dinged at poor exchange rate. Maybe in a country with excessive instability.. but not in Canada, and not any time soon.

[iflyforpie]

"Though it seems like deflationary end times to some right now, the COVID-19 scare is going to pass, and we will be left with monetary and fiscal bazookas having been fired," worries market analyst Gary Tanashian on the site Seeking Alpha.

Once a government has started pouring stimulus money into an economy, it is notoriously hard to start pulling it back out again, especially, as in the U.S. case, during a presidential election year. Similar forces will be at work in Canada where, because of the Liberal minority government, an election could happen at any time.

Tanashian suggests the inflation is already happening now, but is disguised by the temporary COVID-caused crash in demand. And once the lockdown begins to lift and everyone roars back to working and shopping and eating out, there will be too many dollars chasing too few goods and services. And that's the classic definition of inflation, which he sees showing itself by the end of 2020, and surging over the next two years.

If we do see a return to inflation, it's hard to predict how it will play out. But central banks likely will start raising rates to keep it in hand.

https://www.cbc.ca/news/business/pittis ... -1.5521267

Doubtful.

Again.. the stimulus money is just replacing what would have been earned. To use a cash equivalent.. instead of the Canadian banks ordering stacks of $20s from the Bank of Canada for withdrawals based on payroll direct deposits or business deposit slips.. it is from CEWS or CERB. They won’t ever order double the amount they usually do based on government payments made months before.

And it’s not even replacing it. Most people are coming up short and having to delve into their savings just to make ends meet, not to spend extra money. This is a good part of why airlines are struggling—no extra cash to fly even if there wasn’t a pandemic or airlines cancelling flights and keeping customer cash.

The only way you’d get inflation is if people got back to work and the benefits continued in a “double dipping” scheme. This is where they will start buying more. In that case a cash-strapped or indebted government is going to turn off the taps.

There might be a bit of inflation—or mostly a recovery—as people get back to normal spending habits. We saw that with gasoline that went to historic lows but came back up as people drove more. Even with “staycations” and people doing a lot more driving.. it never really jumped. Maybe for the first bit as people spend money things will go up... but people would have to go absolutely crazy for demand to outstrip supply especially considering how low demand has been.

Then there’s the other thing. The elephant in the room. Taxes. We got to pay for all of this somehow.. and with an overall tax burden that’s likely increasing, prices won’t be able to just rise with it. Passing costs onto the consumer just means they won’t consume as much.

Unless they can get paid more or borrow more.. THAT will cause inflation... but as the article says, excessively low interest rates (which are required to heavily borrow) will devalue currency, and what business is going to have the extra cash to give out raises? Where will it come from?

So no.. I don’t think we will have to worry about anything other than the 1-3% inflation we’ve seen for years.