Inflation : 40 Year High

[WeneedLumme]

On 5/17/2023 at 2:15 PM, Warhippy said:

Corporations set the prices of EVERYTHING in a free market society like ours. 

I have seen you saying this a number of times. It is not correct. The Market sets the prices in a free market. The Corporations/Suppliers are only one side of a market. The demand side is equally significant. If consumers are not willing or able to pay the prices the suppliers ask, they buy less or they don't buy at all.

 

Corporations, like any other sellers of anything, will typically get the most money they possibly can. Consumers, like any buyers of anything, will typically pay the least money they possibly can. Things like competition, shortages, government subsidies etc. will all have effects on where the equilibrium price settles. 

 

Of course putting money into the hands of consumers increases their ability and willingness to pay higher prices. And of course when that happens, sellers will raise their prices. Expecting otherwise is unrealistic.

[Warhippy]

38 minutes ago, WeneedLumme said:

If consumers are not willing or able to pay the prices the suppliers ask, they buy less or they don't buy at all.

See here's the issue.

While that may have been true regarding electronics and items of convenience.

 

We are now talking about food.  Fuel.  Housing.  Heating and electricity.

 

We are talking about items in which without them, people literally die.  The "market does not dictate" the prices of this as much as corporations do.  Why?  because without these staples people die.

 

Corporate owned housing

Corporate owned industrial farms and grocery stores

Corporate owned oil and gas

Corporate owned electricity and LNG

 

ALL of whom have posted record profits almost every single quarter since about late 2020.  All while every other day is a new story about how people are bleeding and can not survive the endless increases.

 

This is not a situation in which people are affecting things via supply and demand, this is a situation in which the suppliers KNOW full well without it, people will die and as such they know the demand will exist because people can not live without food, fuel, housing or electricity in canada.

 

Want further proof?  Ask yourself how and why canada pays some of the highest costs of goods of these nature out of any nation in the G20 while also having one of the smallest populations yet largest source of resources.

[Warhippy]

2 hours ago, 6of1_halfdozenofother said:

I know this isn't exactly related in a direct way to inflation, but there's an interesting piece in The Conversation that argues corporate tax cuts don't benefit the local economy.

https://theconversation.com/why-we-need-to-rewrite-the-script-on-corporate-taxes-206388

 

I really find copying/pasting their articles here a pain, because of whatever embedded formatting they're using, so I'll just excerpt a piece here:

 

The author, an Associate Professor of Economics at MacEwan University in Edmonton, further points out that Husky and Cenovus got tax cuts but turned around and also cut their workforce in 2020/21.

 

Suncor just did this.  1400+ jobs.

[Ghostsof1915]

Just now, Warhippy said:

Suncor just did this.  1400+ jobs.

Trickle down economics does not work. It just makes the rich, richer.

[Warhippy]

3 minutes ago, Ghostsof1915 said:

Trickle down economics does not work. It just makes the rich, richer.

Maybe...just a few more tax cuts, some breaks and taxpayer funded incentives and they'll stop sitting on their trillions of cash reserves and spend it invest it?

[The Arrogant Worms]

No raise in the BOC interest rate today.

[WeneedLumme]

17 hours ago, Warhippy said:

See here's the issue.

While that may have been true regarding electronics and items of convenience.

 

We are now talking about food.  Fuel.  Housing.  Heating and electricity.

 

We are talking about items in which without them, people literally die.  The "market does not dictate" the prices of this as much as corporations do.  Why?  because without these staples people die.

 

Actually, supply and demand apply to everything in a free market. For example, yes fuel is a necessity. But that doesn't mean that people will consume the same amount regardless of the price.

 

When fuel prices are high, consumers change their behaviour to buy less, by doing things like turning down their thermostat (or turning it up in the summer), carpooling instead of driving separately, changing to more fuel efficient vehicles or leaving the car at home and taking transit, etc. When fuel prices are low, people do the opposite. 

 

And when energy companies are unable to sell all the fuel they have available and want to sell, they are forced to lower their prices until the demand from consumers increases to match the supply.

[bishopshodan]

Bank of Canada raises key interest rate amid stubbornly high inflation

https://ca.finance.yahoo.com/news/bank-canada-announce-interest-rate-080000816.html

 

OTTAWA — The Bank of Canada raised its key interest rate by a quarter-percentage point today, marking the first interest rate change since the central bank announced a pause earlier this year.

The rate now sits at 4.75 per cent, the highest it’s been since April 2001.

[Warhippy]

1 hour ago, WeneedLumme said:

Actually, supply and demand apply to everything in a free market. For example, yes fuel is a necessity. But that doesn't mean that people will consume the same amount regardless of the price.

 

When fuel prices are high, consumers change their behaviour to buy less, by doing things like turning down their thermostat (or turning it up in the summer), carpooling instead of driving separately, changing to more fuel efficient vehicles or leaving the car at home and taking transit, etc. When fuel prices are low, people do the opposite. 

 

And when energy companies are unable to sell all the fuel they have available and want to sell, they are forced to lower their prices until the demand from consumers increases to match the supply.

Try a little experiment.

 

Give yourself $125 for the week.  Now.  Empty your fridge.  Ensure you have a commute to work.

 

Now go grocery shopping for the week for you and your family.  Then pay for gas.  Or pay for gas and then go grocery shopping.

 

$125 a week is suggested to be the average many are living on as a family week by week.  When was the last time you bought groceries?  How far do you think $125 is getting you?  Now how about gas?  Oh crap.  Did you miss a bill payment?  Damn your kid needs new shoes.

 

And now you're in debt.  he rates increased, sure you only borrowed $200 off your credit card but now you're paying about $10 a month or so on that.  Maybe more.  

 

There are things people absolutely can NOT buy less of.  The 4 industries/items I indicated are them and they are absolutely essential to survivial.  

 

Turning down the thermostat in the summer works right?  Oh, wait.  Delivery fees are now through the roof.  My little 1500sq ft home pays about $80-$90 in delivery fees even without using the gas every summer.  We also get taxed twice on it.  once for the gas and once for the delivery of it.

 

You still feeling that people control the market there big shooter?

[Warhippy]

28 minutes ago, bishopshodan said:

Bank of Canada raises key interest rate amid stubbornly high inflation

https://ca.finance.yahoo.com/news/bank-canada-announce-interest-rate-080000816.html

 

OTTAWA — The Bank of Canada raised its key interest rate by a quarter-percentage point today, marking the first interest rate change since the central bank announced a pause earlier this year.

The rate now sits at 4.75 per cent, the highest it’s been since April 2001.

Well golly.

 

The next 18 months will be interesting for sure.

 

Pay off your damned debt people

Edited June 7, 2023 by Warhippy

[Gurn]

"Free market"

 

That is some funny stuff right there.

 

[DrJockitch]

3 minutes ago, Warhippy said:

Well golly.

 

The next 18 months will be interesting for sure.

 

Pay off your damned debt people

There have only been a couple times in last several decades where a locked in mortgage was cheaper than a floating and this is one of them. Luckily we locked in ours at 1.2%.

[Warhippy]

8 minutes ago, DrJockitch said:

There have only been a couple times in last several decades where a locked in mortgage was cheaper than a floating and this is one of them. Luckily we locked in ours at 1.2%.

My wife and I have just under 3 years left before we have to renew.  I see it getting a shade worse before better but it will be nice to know that rates will have to drop before then

[Warhippy]

Even more hikes expected by year end 

 

Now, however, observers are increasing their bets that even more rate hikes are coming.

Royce Mendes, an economist with Desjardins, is among those who thinks they aren't done yet.

"It's unlikely they'll see enough progress towards restoring price stability before their next scheduled rate decision for this to be the final hike of the cycle. As a result, we continue to lean towards another 25-basis-point rate hike in July, which would take the policy rate up to five per cent," he said.

Trading in investments known as swaps has fully priced in at least one more hike by the end of the year, and is even open to the possibility of one more past that, to 5.25 per cent or beyond.

[The Arrogant Worms]

I spoke to soon with bad information.

[Warhippy]

8 minutes ago, The Arrogant Worms said:

I spoke to soon with bad information.

No, they just delayed the announcement is all

[Bure_Pavel]

1 hour ago, Warhippy said:

My wife and I have just under 3 years left before we have to renew.  I see it getting a shade worse before better but it will be nice to know that rates will have to drop before then

Im in same boat, will be on the decline by then but probably still above 3%. Will probably look at shorter term for the next one like a 3 year fixed, until rates drop down to a more reasonable level. 

[Warhippy]

20 minutes ago, Bure_Pavel said:

Im in same boat, will be on the decline by then but probably still above 3%. Will probably look at shorter term for the next one like a 3 year fixed, until rates drop down to a more reasonable level. 

Paying $230 more a month for us is far more palatable than paying $550.

 

I know of some people seeing or potentially seeing an almost 35% increase on their payments based on what they borrowed and what their downpayment was.  Insanity really.

[Bure_Pavel]

17 minutes ago, Warhippy said:

Paying $230 more a month for us is far more palatable than paying $550.

 

I know of some people seeing or potentially seeing an almost 35% increase on their payments based on what they borrowed and what their downpayment was.  Insanity really.

A lot of people were buying above their means with rates so low. I don't feel to bad for them though, as if they bought a couple years ago they would still make a good chunk of money selling the place and downsizing. There were a lot of people getting tricked into opting for a variable mortgage too even though rate were historical low as well. My mortgage broker tried to sell me on a variable at the last second even though I was locked in under 1.8% for 5 years and it kinda rubbed me the wrong way.   

[bishopshodan]

I went variable for 20+ years.

When I bought my expensive property 3 years ago, I went fixed for the first time and I am so glad I did. Lucky.