October 2021 Inflation | Page 9 | General financial discussion | Discussion forum

Vatox said

Yep. They use services. But they also consume and that does help. Hopefully it’s a positive net contribution of all.  

My personal experience:

My inlaws fit the immigrant seniors definition. Never earn a penny while in Canada, so pay no tax. Collect OAS, GIS, free drugs coverage, GST rebate OHIP etc (I may have missed a couple others).

Yes they consume but at best its a breakeven for the govt. In the sense they spend what was given to them for free....

savemoresaveoften said
Yes they consume but at best its a breakeven for the govt. In the sense they spend what was given to them for free....  

Perhaps but at least we know on a 100% basis that the EI (Economic Impact) multiplier of about 7 generates $7 for every dollar spent. Imagine if the taxpayer had kept that dollar in a savings account and not spent it... or the bank that holds that $1 did not lend it out.

Sarcasm aside, that is a fundamental premise of macro-economics. Pushing money through the system keeps the economy going. Freeze it, as in the Great Depression, and the economy seizes up. It took a long time for central bankers to have learned from FDR's New Deal.

Vatox said
This is getting political again, so let’s just agree that immigration is needed so we don’t end up like Japan.

Can't do that as the current immigration scheme is problematic. It is one thing to only allow productive young people into the country. It is a whole other thing if an entire extended family must be granted status at the same time.

Bringing in care-givers to attend long-term old-age facilities may be necessary, but they are also creating a problem if they also bring along their own old people to fill them up. There is no gain if you pay a dollar to save a dollar.

savemoresaveoften said

u mean if there is no inflation btw now and Aug 2022, then it will still be a 2% per annum ? With food prices schedule to rise 5-10% next year, and everything that I spend money on (my physio just advised me on 5% price increase Jan1) ARE going up in price, its hard for me to see CPI coming back at 2% any time soon.

Yes. The October Consumer Price Index is 143.9. The index would have reached that in August next year had inflation been 2% per annum from January 2020.

As long as prices don't go up 5% each year from now on, it is easy to have 2% inflation. Have the 5% increase next year and then 2% per annum from that point on. After 12 months, that widely publicized YoY inflation rate will be 2%!

Very few people are on actual fixed income. I don't know where you get that data but I'd like to see the references. It's not really the way our system works. For working people, there are increases in wages (minimum and otherwise) and tax brackets. For retirees, there are CPI increases in CPP, OAS, GIS and at least some DP pensions (fully or partially COLA'd). Even savers will see HISA and GIC rate increases as bond yields move up.

The biggest issue, as I previously noted, is CPI movements in all of those lag actual impacts by 6-10 months or so. Not so bad with 2% inflation. Harder with 4-6% inflation.

Actually Canada's official poverty rates have declined measurably since 2015, increased gov't supports, etc. The gov't itself has previously said "The federal government's Poverty Reduction Strategy is already showing promising results in meeting Canada's commitment to reduce poverty by 20% by the year 2020. From 2015 to 2018, the overall poverty rate in Canada fell from 14.5% to 11% of people living under Canada's Official Poverty Line." So that group is not growing, it's diminishing.

So unless I'm provided with specific data re why that 11% or so demographic needs special attention re inflation I'd instead support fighting inflation with a more generalized, macro approach looking at the whole economy. At the same time you can always increase existing gov't support amounts for the poor if poverty rate begins to increase.