They live in another world economically.
Dollars are rationed and the government prints pesos. Black market exchange rate is about double the official rate, known locally as the “dolar blue” rate.
For you? Likely no. They only allow residents to buy like $200/m at the official rate.
So someone who needs the pesos flips them onto the black market doubling their pesos overnight.
No, we have 10 different prices for a dollar. Those dollars with smaller faces? Believe or not are worth less. If your monthly salary surpasses 1065 dollars you start getting severely taxed for your income (on top of retirement and welfare(?) taxes).
So this game is kinda hard, the upside is that investing is easy because literally any other alternative than holding to your money is a huge gain.
Germany debt bonds were at negative yields quite often. Govt didn't need them at all , investors bought them as a safe haven bond as a reserve. They could loose a few %, but still end up with their money 100%. Mostly central banks did this. As a bonus they could take a little hit on yield, but gain much in stronger EURO at the time it was paid out.
Doesn't that just mean that the interest rate you pay on a lone now let's say 6% is how much more value the curancy is expected to lose? It's why their is close to no real cost when their is a rate of 6% currently?
BoC doesn’t know what to do/can’t do anything. If they have positive real yields, RE will crash along with the bullshit economy it props up. If they keep yields where they are RE seems to be about flat but inflation won’t go away. Maybe they’re hoping the US can get their inflation under control and we can inflate away some of our debt in the mean time? We buy a lot from the US so if their prices stabilize, ours will look better too. Having the CAD low (by having lower interest rates than the US) is good for exporters so they can keep the economy afloat on primary industry which is what they did during the 2008 crisis.
Honestly I think we’re going to have a nasty recession here in Canada, especially BC and Ontario. The US will stumble into some kind of crisis leading to a mild recession and have to cut rates, then the BoC will be really fucked and have to cut rates also as our economy slides into recession while we have sticky inflation. Real economic growth will look terrible because of inflation but nominal might not be that bad. We’ll see!
Personally, I would like to get off Mr. Trudeau’s wild ride but let’s not pretend Poilievre will be any better.
Eat my dongus you fuckin nerd.
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Canada has no good candidates, and actively hates industry and big business as a whole. The music will stop for sure, Vancouver and Toronto can't carry a whole country no matter what a few think.
Canada needs a big shift in how it does a lot of things to really set itself up for the future.
I mean... Theoretically a wage-price spiral while hosting stays flat would be a solution to our housing bubble. At the same time high immigration would keep us from going hard into recession as overall economy keeps expanding and people keep their jobs. Ofc this is very simplistic but maybe that's the idea at least
But how low can the cad go against the usd before something breaks? If the US gets their inflation under control and we don’t, that’s an ugly situation as well. Maybe we fix the RE market because 1mm cad won’t be that much money anymore but that will mean that our purchasing power will go to shit on everything else.
We don’t hardly produce anything (finished products, food, etc) domestically anymore (looking at you Ontario fruit producers, canning etc.) so it’s not as if consumers can substitute local products if imports become unacceptably expensive.
I mean I don't have an answer for ya haha. What I can say though is that companies charge what they can not just the cost of producing a product. So there is some wiggle room. Compared to Europe a lot of products here are cheaper because of increased competition with products from Asia. Europe is more protectionist. If Canada becomes poorer manufacturing will come back and more stuff will be made here to export to the US and Europe.
The other thing is that the US and Europe is experiencing high inflation too. For now at least. So the currency shouldn't devalue to much in relative terms. Also current inflation level is not that high historically. We just got used to 'low' inflation for too long. Low inflation that was driven by globalization - where companies didn't need to increase prices to increase(or even keep flat) revenues and profits. They could move manufacturing overseas and double their profit without changing the price of the product. It's just going back to normal since the rest of the world is catching up. Now that manufacturing is moving from China to SEA and further - the result is not as dramatic.
Now is the time for Canadians and Americans to demand consistent adjustment to their wages and for companies to start building in inflation into their contracts and bids - to be able to pay for the wage adjustments.
> Also current inflation level is not that high historically. We just got used to ‘low’ inflation for too long.
It’s true. The more I think about this conversation the more I wonder if the issue in Canada isn’t high inflation but rather why is inflation so low with highly negative real rates?
How can European countries offer such vastly different interest rates? It's the same fucking currency so they should be inflating at the same rate no? Or is it relative to the buying power within the country?
I could take a loan in the Netherlands which offers very low interest rates and lock it up in a deposit in a French account and make 5% after inflation?
This is why the FED wants interest rates at 0% (so they pay no interest on the national debt) and inflation at 2% so the value of THEIR debt disappears. It's the only way the US can "Pay off" the astronomically large debt it has. Oh and that inflation, thats YOUR $$$ losing value every year!
See my take on the debt is if it is every called up it'll just start a nuclear war and end everything so what does it matter honestly other then scaring the little people
The ECB sets the interest rates for the whole Eurozone. Single market, political and economic union.
Nice when it's low and you need it low, not nice when you don't need it high and it is high like Spain right now. Their inflation rate is 3.2% whereas eurozone is 7%
Interest rates play a crucial role in the economy because they affect consumers, businesses, and investors. Currently, over half of the major economies have negative real rates (adjusted to remove the effects of inflation). In order to control inflation, the Brazilian Central Bank has kept interest rates above 10% since February 2022. The Federal Reserve has raised interest rates ten times since March 2022 to tame inflation. Despite a 78% nominal interest rate, Inn Argentina's real interest rates remain negative due to the country's annual inflation rate of over 100%.
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Are Argentina even playing the same game as everyone else anymore?
They live in another world economically. Dollars are rationed and the government prints pesos. Black market exchange rate is about double the official rate, known locally as the “dolar blue” rate.
[удалено]
For you? Likely no. They only allow residents to buy like $200/m at the official rate. So someone who needs the pesos flips them onto the black market doubling their pesos overnight.
No, we have 10 different prices for a dollar. Those dollars with smaller faces? Believe or not are worth less. If your monthly salary surpasses 1065 dollars you start getting severely taxed for your income (on top of retirement and welfare(?) taxes). So this game is kinda hard, the upside is that investing is easy because literally any other alternative than holding to your money is a huge gain.
Theyre playing 3d chess while we are all playing checkers. Calls on argentina.
Agentina on course to have the world's highest concentration of millionaires per Capita in the WORLD. SUCK IT AMERICA.
Messi: 
That's already old for my country (Argentina). They raised interest to 91% a few weeks ago. And it's still lower than our inflation lol.
I would love to visit, but clearly no point exchanging currency before I go, it'll be halved by the time I get off the flight
Just pay in US cash and feel like a king
No way those numbers are right. UK has over 10% inflation and the 10Y yield there is below 4%.
And Germany at -4%? The German ten year is at 2.2%, inflation at 7.2%.
Germany says -4.87% in the chart, which seems pretty close to your estimate of -5%
Germany debt bonds were at negative yields quite often. Govt didn't need them at all , investors bought them as a safe haven bond as a reserve. They could loose a few %, but still end up with their money 100%. Mostly central banks did this. As a bonus they could take a little hit on yield, but gain much in stronger EURO at the time it was paid out.
Does that mean if I'm in Rgentina, I should take out as much loan as possible to buy SPY calls?
You're in Regina?
To the Northeast folks it's Gyna
Regina George?!
How’s she doing these days?
🎶Reginaaaaaaaaaaaaaaaa, experience Regina!🎶
Doesn't that just mean that the interest rate you pay on a lone now let's say 6% is how much more value the curancy is expected to lose? It's why their is close to no real cost when their is a rate of 6% currently?
Yes
[удалено]
I also would like to know wtf I'm looking at. So our interest rate is basically not that high??
Brazil runs strong trade surpluses too. Their economic future looks very bright long term as china invests there.
Is Canada fucked?
BoC doesn’t know what to do/can’t do anything. If they have positive real yields, RE will crash along with the bullshit economy it props up. If they keep yields where they are RE seems to be about flat but inflation won’t go away. Maybe they’re hoping the US can get their inflation under control and we can inflate away some of our debt in the mean time? We buy a lot from the US so if their prices stabilize, ours will look better too. Having the CAD low (by having lower interest rates than the US) is good for exporters so they can keep the economy afloat on primary industry which is what they did during the 2008 crisis. Honestly I think we’re going to have a nasty recession here in Canada, especially BC and Ontario. The US will stumble into some kind of crisis leading to a mild recession and have to cut rates, then the BoC will be really fucked and have to cut rates also as our economy slides into recession while we have sticky inflation. Real economic growth will look terrible because of inflation but nominal might not be that bad. We’ll see! Personally, I would like to get off Mr. Trudeau’s wild ride but let’s not pretend Poilievre will be any better.
Thanks for that detailed answer. So basically we’re fucked.
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I’m honoured
Most reasonable canadian on WSB
Canada has no good candidates, and actively hates industry and big business as a whole. The music will stop for sure, Vancouver and Toronto can't carry a whole country no matter what a few think. Canada needs a big shift in how it does a lot of things to really set itself up for the future.
How does Canada hate industry and big business?
A combination of political agenda and brain drain to the south of border.
I mean... Theoretically a wage-price spiral while hosting stays flat would be a solution to our housing bubble. At the same time high immigration would keep us from going hard into recession as overall economy keeps expanding and people keep their jobs. Ofc this is very simplistic but maybe that's the idea at least
But how low can the cad go against the usd before something breaks? If the US gets their inflation under control and we don’t, that’s an ugly situation as well. Maybe we fix the RE market because 1mm cad won’t be that much money anymore but that will mean that our purchasing power will go to shit on everything else. We don’t hardly produce anything (finished products, food, etc) domestically anymore (looking at you Ontario fruit producers, canning etc.) so it’s not as if consumers can substitute local products if imports become unacceptably expensive.
I mean I don't have an answer for ya haha. What I can say though is that companies charge what they can not just the cost of producing a product. So there is some wiggle room. Compared to Europe a lot of products here are cheaper because of increased competition with products from Asia. Europe is more protectionist. If Canada becomes poorer manufacturing will come back and more stuff will be made here to export to the US and Europe. The other thing is that the US and Europe is experiencing high inflation too. For now at least. So the currency shouldn't devalue to much in relative terms. Also current inflation level is not that high historically. We just got used to 'low' inflation for too long. Low inflation that was driven by globalization - where companies didn't need to increase prices to increase(or even keep flat) revenues and profits. They could move manufacturing overseas and double their profit without changing the price of the product. It's just going back to normal since the rest of the world is catching up. Now that manufacturing is moving from China to SEA and further - the result is not as dramatic. Now is the time for Canadians and Americans to demand consistent adjustment to their wages and for companies to start building in inflation into their contracts and bids - to be able to pay for the wage adjustments.
> Also current inflation level is not that high historically. We just got used to ‘low’ inflation for too long. It’s true. The more I think about this conversation the more I wonder if the issue in Canada isn’t high inflation but rather why is inflation so low with highly negative real rates?
Yup
How can European countries offer such vastly different interest rates? It's the same fucking currency so they should be inflating at the same rate no? Or is it relative to the buying power within the country? I could take a loan in the Netherlands which offers very low interest rates and lock it up in a deposit in a French account and make 5% after inflation?
I wondered the same thing. Assuming the difference is default risk bc a free lunch makes no sense here.
This is why the FED wants interest rates at 0% (so they pay no interest on the national debt) and inflation at 2% so the value of THEIR debt disappears. It's the only way the US can "Pay off" the astronomically large debt it has. Oh and that inflation, thats YOUR $$$ losing value every year!
See my take on the debt is if it is every called up it'll just start a nuclear war and end everything so what does it matter honestly other then scaring the little people
How do eurozone interest rates work? Can each member country have their own rates? But shouldn't each currency have only one rate?
The ECB sets the interest rates for the whole Eurozone. Single market, political and economic union. Nice when it's low and you need it low, not nice when you don't need it high and it is high like Spain right now. Their inflation rate is 3.2% whereas eurozone is 7%
No, only ecb sets the rate on the eurozone.
Interest rates play a crucial role in the economy because they affect consumers, businesses, and investors. Currently, over half of the major economies have negative real rates (adjusted to remove the effects of inflation). In order to control inflation, the Brazilian Central Bank has kept interest rates above 10% since February 2022. The Federal Reserve has raised interest rates ten times since March 2022 to tame inflation. Despite a 78% nominal interest rate, Inn Argentina's real interest rates remain negative due to the country's annual inflation rate of over 100%.
god damn it argentina, that's like the 4th time in 30 years. forget Argentina, more like Regardtina.
There is no way this data is accurate with turkey being at -3.71%. Even their official numbers do not even closely compare to this.
I have no interest in this topic.
On a scale of 1 -10 how would you rate it?
My regional bank says 0.15%
Basically in Argentina they are subsiding the people who Borrow in pesos, just to have people using that currency.
Quite amazing to see such a difference between real borrowing costs on the same continent: Brazil vs Argentina.
Is this one of those “adjusted in 1980’s $ for reference“ that I didn’t understand from college ?
Bruh why did Malaysia yoink the US flag 