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Finance committee Bubbles tend to involve emotional impact, and regulatory movements like those may not have a direct impact but they temper the expectations of people in the market.
March 24th, 2022Committee meeting
Stephen Punwasi
Finance committee Sure. The Bank of Canada staff report indicates that government spending is related to that. Basic economics also tends to agree with that.
March 24th, 2022Committee meeting
Stephen Punwasi
Finance committee On the impact of quantitative easing, I guess the capital markets need to settle and all of the consumption. As this extra money is injected into the market, it will still have that impact that will take 18 to 24 months to trickle to the market. By doing quantitative tightening,
March 24th, 2022Committee meeting
Stephen Punwasi
Finance committee Yes, it would be a disaster if we ended up in a recessionary environment in which we had high inflation. That would be similar to the situation in the 1970s or the early 1980s, which would not be great for anyone.
March 24th, 2022Committee meeting
Stephen Punwasi
Finance committee Interest rates would have increased at the scale of borrowing they were doing. They would have absorbed a lot of the credit liquidity in the market, and that would have increased all mortgage rates right across the board, but it would have actually increased all lending rates. O
March 24th, 2022Committee meeting
Stephen Punwasi
Finance committee It is usually people who are paid in cash. The wealthier you are, the less likely temporary inflation will erode your wealth because you will have better ways of allocating your money with inflation hedges. You would own a home or you would own investments that would respond to
March 24th, 2022Committee meeting
Stephen Punwasi
Finance committee Borrowers would. The question is whether or not the benefit of the amount of money borrowed outweighs the negative impact of inflation. If 70% of your costs increase, but 30% of your costs are housing and your mortgage gets deflated due to low rates, you're kind of benefiting,
March 24th, 2022Committee meeting
Stephen Punwasi
Finance committee They're a pretty big holder of debt, to say the least, but inflation itself is a tax, by design because those who are holding debt end up paying the liability to the issuer, which would be the state, so higher inflation means that the issuer gets to dilute the value of their own
March 24th, 2022Committee meeting
Stephen Punwasi
Finance committee Definitely. The central bank itself actually makes that statement in its latest study, which is literally called "The Central Bank Strikes Back!". They suggest that in the future for a crisis like this that a framework be put in place that the government can no longer threaten
March 24th, 2022Committee meeting
Stephen Punwasi
Finance committee Yes. There's a supply and demand issue with credit, too. If the demand for credit, which would include the government borrowing, exceeds the supply of cash, then interest rates rise on that cost. To keep credit markets stable, the central bank will inject liquidity into the marke
March 24th, 2022Committee meeting
Stephen Punwasi
Finance committee Yes, definitely. Sorry, did we miss that explanation of supply and demand with credit?
March 24th, 2022Committee meeting
Stephen Punwasi
Finance committee Basically, the more demand there is for credit the higher interest rates will go. The central bank needs to inject liquidity into the market to stabilize those interest rates to keep credit growing at a rate that they feel comfortable with. They need to abandon inflation and just
March 24th, 2022Committee meeting
Stephen Punwasi
Finance committee Yes. I definitely agree with that. One of the core features of quantitative easing is that they purchase government bonds that end up impacting debt of similar terms.... With the BoC's QE program, they purchased a lot of those five-year bonds intentionally to lower the cost of
March 24th, 2022Committee meeting
Stephen Punwasi
Finance committee Huh, that's a sore topic, right? Let's use what the Bank of Canada said in one of its studies. They said, “rising levels of public debt have triggered mounting political pressure and government interference with central banks.” Essentially, there are two forms of monetary domin
March 24th, 2022Committee meeting
Stephen Punwasi
Finance committee Good afternoon, and thank you for the invite. My name is Stephen Punwasi. I'm the chief data analyst at Better Dwelling, Canada's largest independent housing news source. Some of you might be familiar with my work, helping to identify the extent of Canada's money laundering pro
March 24th, 2022Committee meeting
Stephen Punwasi