Bank of Canada Warning: Slow Down Borrowing

Thanks for clicking. The Bank of Canada

does not want Canadians borrowing any

more money. This is the conclusion drawn

from the Canadian survey of consumer

expectations in the business outlook

surveys. And yeah, what these two

surveys reveal is not only shifting

attitudes towards the health of the

economy on the part of Canadians, but

also a central bank that wants us to

know that attitudes have shifted.

>> I'm just trying to get you to slow the

down. Okay.

>> So, what I want to do today is go over

the survey of consumer expectations and

the business outlook survey. take a look

at why the Bank says these are

problematic and then discuss why we

should find these surveys problematic

ourselves. The Bank of Canada's next

interest rate announcement is in a

couple of days with a press conference

set to be held thereafter. And we'll

obviously have an update out on both on

this channel. Make sure you click like

and subscribe if you want to get those

updates. But for now, let's get into

these surveys.

Onto the surveys. First up, the survey

of consumer expectations. And the bank

really really wanted to get the

information on this one. They undertook

a first round of surveys. They undertook

a second follow-up to that first round.

And then they made a third effort asking

about shifting attitudes stemming from

the war on March 26th.

>> I'm not going to be ignored, Dan.

>> According to these surveys, prewar

Canadians appear to be getting more

confident with the consumer spending

index less terrible than it had been.

and further those workers in those

industries that are most affected by

trade, those workers that would be most

worried about KUSMA said they were

planning on spending more than they had

previously. Now, just very briefly, as

when you took a look at that chart, you

may have as I did got a little suspect

as I find it's very difficult to believe

that those workers most sensitive to

trade were more cautious in say the

fourth quarter of 2022 than they are

amid current KUSA uncertainty. So, let's

play our favorite game of does that

match the data and we'll grab that Q4

data from 2022. Except taking a look at

that survey, we can see that the word

trade isn't even mentioned, which is

odd. The bank says that they're

comparing data now going back multiple

years. So, let's download the CSV

workbook from back in 2022 and still

absolutely nothing in there. So, the

Bank of Canada is presenting this data

from a survey that is conducted now

saying it's evidence of improving

consumer sentiment comparing it to data

from 2022 when at that time it didn't

let us know about that data. This tells

me that when the central bank releases

these surveys, it has other questions

it's asked but only releases the

questions that support its narrative.

And since we can't trust what the

government tells us, right?

>> Not if you understand what I'm saying. I

am.

>> But since we can't trust what the

government tells us, then these numbers

need to be taken with a grain of salt as

the central bank is only releasing the

data to us that it wants. The data

that's going to support the message it

wants to send. Regardless, all of this

recent data was gathered prior to the

war. Fast forward, the bank did another

follow-up, now finding about 81% of

Canadians think inflation is heading

higher on the war. And the bank's

definitely not going to like that data

as it's actively trying to prevent

Canadians from demanding wage increases

to deal with these higher costs.

Demanding wage increases to make up for

their loss purchasing power on

inflation. The worry, according to the

bank, is that businesses will pass on

the higher cost of oil to consumers who

then demand wage increases to pay for

those higher prices and then businesses

pass those costs on to consumers

creating a self-reinforcing loop. Recall

back in 2022 when the governor warned

business leaders not to build inflation

into their wages, telling them don't

build that into long-term contracts.

Don't build that into wage contracts.

So, this data coming out of the consumer

survey, which the bank was concerned

enough about to go back for a third

follow-up, showing a consumer that is

expecting inflation as this goes on, is

definitely not what the bank wants to

see. So on that survey of consumer

expectations, we one have a bank that's

not going to like what it sees. Two

wants us to know that it doesn't like

what it sees and has chosen to release

that data. And three wants us to know

that things were improving pre-war and

now they're not.

>> Everything was going so well. You know,

I mean, I thought I thought we were

gonna

>> Speaking of messaging, the central

bank's also not going to like what was

released in the business outlook survey

where yet again, the central bank went

and did the first survey, did a

follow-up, and once again went back for

a third round of questions following the

war. And again, I can't stress this

enough, that's just not normal. On the

survey of consumer expectations and

business outlook survey, the bank

usually does one initial survey and then

does a follow-up. It's very very rare

for them to spend the money to go back

and do it again for a third time. And

the messaging was very clear. Prewar,

businesses thought employment plans were

normalizing. Investment plans were

increasing. Fewer firms were worried

about trade with the United States. Less

businesses were planning price increases

and longer term inflation expectations

had normalized. Fast forward and now the

bank's telling us that things have

definitely changed with businesses now

expecting more price increases with

higher fuel and higher freight costs for

things you and I buy. And yeah, that

makes sense. Did you guys see the price

of chicken as of late?

And with that revised outlook,

businesses are now revising their

inflation expectations now, predicting

that the CPI will be almost 4% within a

year's time. So, for right now at least,

the central bank is releasing these

surveys letting us know that for now

they do not want us borrowing and

spending, letting us know that things

have changed with the war. And we've

discussed why before on this channel, as

unless we see a big increase in the

money supply, we're not going to see

broad-based inflation. And we're not

going to see those big increases in the

money supply unless either a consumers

borrow the money from the banks or b the

bank of Canada prints it. And that's why

the central bank is undertaking all of

this extra effort to let us know that

things have changed. That it may have

been able to cut interest rates prior to

the war, but it certainly won't be doing

so now. With all that said, let's very,

very much remember what exactly we're

dealing with here.

>> What am I, a toxic person?

>> Nope. Just part of the government, which

by the very nature of its existence is

designed to ensure that we act in a way

that we would otherwise not. if we did

everything the government wanted us to

do. Naturally, there would be no need

for a coercive apparatus. So, let's just

keep that in mind when we're seeing

consistent headlines like this. While I

don't doubt that the war can has and

will have a big impact on the economy,

Canada also had major economic problems

prior to the war. So much so that in

contrast to the scam the Bank of Canada

tried pulling in October with the help

of its minions in the media and the

banks, a scam we went over at great