September 2021 Inflation | Page 4 | General financial discussion | Discussion forum

Because they give the appearance of dire circumstance. Scaremongering attracts eyeballs and sells advertising space.

I find it hard to believe CERB, etc money was spent on stocks or other inflated assets, I think it was more the lack of spending on trips, entertainment venues, etc that found its way into assets. Some people saved a whack of money forgoing trips, etc.

Talked to a long-time contractor the other day, he said he can't get workers unless he pays them cash because they all want to stay on the gov't virus money too. Around here, anyway.

savemoresaveoften said

Bill said
I find it hard to believe CERB, etc money was spent on stocks

A lot of the younger generation that rec CERB puts it into meme stocks for quick capital appreciation the mindset. Platform likes robinhood and the like makes it easy to trade odd lots as small as 1 share.  

The bank “printed” money via QE. QE artificially raised the cost of bonds and made borrowing cheap while making saving pointless. That forced money into desirable assets, like houses stocks, bitcoin, etc.

dougjp said
Article this morning that is right on;

https://www.cbc.ca/news/business/bank-of-canada-future-column-don-pittis-1.6226829?cmp=newsletter_CBC%20News%20Morning%20Brief_5043_325678

A key paragraph from this, that likely will cause most or everyone here to say "I can relate to that" -
" But while the Macklem expects people with pandemic savings will only spend 20 per cent of that cash on goods, others, including the boss of RBC, David McKay, have predicted consumers will go on a major spending spree, driving inflation to new heights. It's possible that rising inflation would actually encourage spending as people watch the value of their savings shrink. "

CPI, especially as its structured with its components, is just diversionary rear view mirror thinking, promoting lack of timely or effective action, IMO.  

I think this time around, its not just spending spree that drives inflation. But rather the much longer than expected global disruption of shipments plus every business try to recoup their pandemic losses quickly via raising prices that drives it. With container shipping cost up 4x, all food and non-food prices are going up, no matter what one's buying habit is.

The Bank of Canada rate has not changed, but the BoC HAS signaled it expects rates to rise sooner than had been expected until the Oct. 27th announcment. They hint at perhaps one or two .25% increases in mid-2022. That MAY nudge mid-to-long-term rates a touch higher: I'm holding on to my just-maturing GIC payout for at least a week to see if GIC rates move up a bit. In this situation, I wouldn't expect rates to move lower as a whole any time soon. (Any sort of major events might change this, of course.)

StatsCan figures indicate there IS a massive cash hoard unspent. Lots of government money went to people who were not yet on the edge, and not commuting to work, not eating out, not having entertainment events to go to and not having to dress and shave for work (etc.) cut expenses. Have you noticed the incredible push in financial-services investment advertising lately? People doing well are banking lots of cash; people working front-line or bottom-rung jobs are doing poorly. That's a big part of why so many are taking advantage of subsidies to quit crappy, low-paid, no-future marginal jobs and either retrain or simply spend more time looking for better opportunities.

And of course foreign workers are inhibited from coming to work by the pandemic. This will push up wages, which is a good thing in terms of income inequality.

Property prices continue to be pushed upward by policy choices favoring home investment. We could all (save the speculators) benefit by reduced, stable home prices. The housing market currently provides outsized returns that depress business investment AND tie up money that could be used for consumer spending.
RetirEd

Not necessarily. People don't just blindly pay whatever is being asked.

Just ask the lumber industry what happened to lumber prices this past year.

If retailers jack up their prices of Christmas ornaments by 3X, they may find they still have most of their inventory on December 24. Demand for Christmas ornaments and their price usually craters after December 25!

Norman1 said
Not necessarily. People don't just blindly pay whatever is being asked.

Just ask the lumber industry what happened to lumber prices this past year.

If retailers jack up their prices of Christmas ornaments by 3X, they may find they still have most of their inventory on December 24. Demand for Christmas ornaments and their price usually craters after December 25!  

This has been the case for several years. Retailers couldn’t raise prices because consumers refused to purchase their products. That inhibition has been broken and will impact behaviours for a while now.

Lumber prices are still high for consumers.

HermanH said

mordko said

This has been the case for several years. Retailers couldn’t raise prices because consumers refused to purchase their products. That inhibition has been broken and will impact behaviours for a while now.

Even if costs have not risen for all companies, they are going to increase prices now, because the market has told them that they are willing to accept the 'inevitable' higher prices. Any business not raising prices is just foolish and missing out on an opportunity.  

Yep. And salaries are rising at a brisk pace. Thats going to push RPI up for quite some time. The Banks are going to regret they ever used the word “transitory”.