I had a great weekendCycling around the island. Just catching up on the posts. Some observations for what they're worth.
1) You have to measure inflation in time. I forger who said that. Hayek maybe. How many hours did you need to work to buy a given basket of goods and services one, two, five, ten years and how many hours do you need to work today to buy the same?
As they raise taxes, you need to work more hours. I'd argue that increasing taxes are the main cause of inflation. An economist from Desjardines (I forget his name) says that now the ever increasing interest rates are causing more inflation in a positive, (self-reinforcing) feedback in that higher interest rates are causing higher inflation which in turn drives interest rates higher.
2) The Inequality of Clausius: It is a direct consequence of the Second Law of Thermodynamics. It is telling me that there is no source of energy that is more economical, more abundant with the least amount of environmental impact per Joule of energy delivered than hydrocarbons.
So if you'rebetting that renewables will deliver cheaper energy to cool inflation and to save the planet then it won't happen. ESG investors will be running back to hydrocarbons soon enough.
3) Anecdotally I know of or have heard of many people who are selling equities to raise desperately needed cash to cover increased household debt service costs. Does anybody have any solid info on how much money is leaving the market to cover debt. One friend sold almost everything just to pay down the principal when his mortgage came up for renewal.
His calculation makes sense I think. Sell equities and reduce mortgage and it's like getting an immediate 7 or 8% return. Don't sell equities and the return has to be higher than 7 or 8% on investments to get equivalent real return as paykng down mortgage. And remember that mortgages are paid with after tax dollars which you need to work increasingly more hours to make as taxes increase.
Anyway, have a great week!