RealAg LIVE! with JP Gervais on inflation concerns

Episodes:

This week’s financial news seems to be all about inflation concerns, but our guest today doesn’t share the same concern level as everyone else.

JP Gervais, chief economist at Farm Credit Canada, joins host Shaun Haney for today’s RealAg LIVE!

RealAg LIVE! streams every weekday at 3 pm E on Youtube, Facebook, and Twitter!

SUMMARY

  • Inflation starts to be a threat when businesses and households start to have expectations about future inflation
  • Disposable income is slightly down
  • If businesses report that they’re more likely to raise prices…
  • 1.1 per cent in Canada in February, the next report will be released in early April
  • Is this inflation expected to be permanent?
  • When should we worry?
  • What about the U.S.? Federal reserve report came out today
  • Interest moving up for longer term yields. 5 yr 10 yr bond yields interest moving up, everything else stays
  • Pressure to raise these rates if the economy gets “steamy”
  • Pre-COVID-19 levels are sure a part of the discussion; a $1.9 trillion COVID-19 stimulus package
  • Inequality that existed in the U.S., prior to the pandemic
  • Should governments be concerned about debt levels; should it be paid back through HST or income tax? Net debt, gross debt definitions
  • Consumption tax or income tax? One of the best tools is to structure it so the most at-risk aren’t hit the hardest
  • Trade. What we’re seeing from a global economic perspective, is Gervais bullish?
  • Signals out of China will take about another month to understand
  • Gervais is optimistic about the year
  • African Swine Fever in China is Rabobank’s biggest concern. Gervais says the evidence coming out of USDA is confusing
  • Self-fulfilling prophecies
  • There’s some lessons learned from the last 20 years of monetary policy.
  • How much will the Bank of Canada look at what the U.S. federal reserve is doing?
  • At the end of the day, what’s likely to happen with domestic factors in our country?
  • How about negative interest rates, wasn’t the early stimulus put in to stop deflation? Last resort policy if no control or leverage over the economy
  • What can we expect to see out of the Canadian economy in 2021?

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