A nearly $1 TRILLION decline.
Across our country, economic reality continues to reassert itself.
For years, Canada lived off the productivity of the past, borrowing more and more money while strangling the energy sector and raising taxes on the most productive aspects of the economy.
This led to our country becoming increasingly dependent on what was essentially fake growth, as money poured into the housing market and everything was increasingly fuelled by debt.
When the federal government shut down large swathes of the economy during the covid pandemic, they – enabled by massive money printing by the Bank of Canada – flooded the economy with printed money.
Inevitably, the combination of lockdowns and money printing led to massive inflation, as there was more money available amid a smaller supply of goods.
This ‘boosted’ the wealth of Canadians in dollar terms, and much of the money found its way into the housing market, causing an even more outrageous surge in housing prices.
The Trudeau government was glad to boast about all of this, claiming their policies ‘worked’ and were strengthening the economy.
But the truth is the exact opposite.
All along, the Liberals have been weakening our economy, taking more and more purchasing power out of the hands of Canadians, concentrating money in the hands of the government, and steadily eroding the productive foundation of the country until growth rested almost entirely upon illusory and unsustainable foundations.
And now, all of that ‘growth’ and ‘wealth’ is being eroded, as economic reality bites.
According to Statistics Canada, the net worth of Canadian households dropped by $990.1 BILLION in the second Quarter of 2022.
This is the largest drop on record, with household wealth having fallen a full 6.1%:
“Household sector net worth—the value of all assets minus all liabilities—dropped $990.1 billion in the second quarter to $15,215.3 billion, a decline of 6.1% from the first quarter. The contraction in household wealth was the largest decline on record as households were faced with challenging equity, bond, and housing markets, all of which pointed to lower asset valuations. This deterioration followed a period of strong growth beginning in early 2020 during which households saw their wealth rise significantly on ebullient housing and financial markets.”
“The value of households’ total financial assets fell for the second consecutive quarter, dropping by a record $530.6 billion in the second quarter as market turmoil broadened. This decline was compounded by a $389.8 billion drop in the value of non-financial assets, as the streak of gains in real estate that began in late 2018 was halted by a housing market grappling with rapidly rising interest rates. Financial liabilities increased by $69.8 billion during the second quarter of 2022 due to the continued expansion of outstanding mortgage debt and a rise in consumer spending, which fueled growth in non-mortgage debt.”
Flooding an economy with printed money can certainly generating some big spending in the short-term, but when that happens in an increasingly unproductive economy it represents consumption far outpacing production. And of course, that can’t last.
Until our economy produces more, and until the pace of money printing slows, the wealth and purchasing power of Canadians will continue to decline, and Canadians will continue to fall further and further behind.
Spencer Fernando
Photo – YouTube
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