Tag Archives: economics

Economic Overhaul – Election 2021

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Economic Overhaul – Election 2021

 

Three weeks to go until an election, and we have another contraction in the economy. What do all the parties say they are going to do about it? Let’s see, we will borrow money and increase government spending. We will increase subsidies to businesses, we will lower corporate/personal taxes, and increase various pitiful tax credits to families. Do any of these ideas sound new to you? Have any of them seriously changed the course of our economy before? No? Then why do they keep parroting them?

 

Because we keep voting for them.

 

Canada Votes

 

I personally believe we need an Economic Overhaul where we revamp the way our system works with some major changes, rather than small tweaks.

 

I’m going to outline four different approaches that I think can be used either individually or combined that could seriously alter the way our economy works for the better.

 

  1. The rules we have surrounding free trade agreements.
  2. Altering and prioritizing different tax methods.
  3. LEM- Labour Expense Multiplier.
  4. Variable sales taxes based on company size.

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LEM: Labour Expense Multiplier

Labour Expense Multiplier

 

There are four primary issues in our economy which contribute to a continual rise in inequality:

 

  1. The global supply of cheap foreign labour, resulting in the outsourcing of jobs from developed nations to developing nations.
  2. How our current tax structure rewards investment and discourages the hiring of and desire to perform labour.
  3. The global race to the bottom in corporate tax rates.
  4. The rise in automation and replacement of labour.

It is my belief, that the following new expense multiplier can alleviate all four of the primary issues above.

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Economic Collapse: A risk worth worrying about?

 

 

Economic Collapse. Yes, it’s a real risk, societies have risen and collapsed all throughout history. Each time the people thought this time was different and that they were too smart or knowledgeable to allow it to happen again. With a global pandemic shaking the world, fascism on the rise, and countries moving more towards isolation than cooperation, an economic collapse is a real risk.

 

 

The good news is it is not a risk worth worrying about. Why not? Well you can worry about it all day and accomplish nothing. The reality is it still has an exceptionally low probability of occurring. Since this is an investment related blog, let us discuss how it would impact your finances.

 

When clients discuss their investments with us, there is always that fear in the back of their mind that they might some how lose it all. A risk, which would only come to fruition due to an economic collapse so bad that our society never recovered from it. In this scenario, everything would be worthless. Yes, your stocks would be worthless, as would your house, your cash, your car, your gold, etc etc.

 

 

I like to explain this to people by using a rollercoaster metaphor about why you shouldn’t concern yourself with he risk of this happening, as you are subject to it whether you invest in the market or not.

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