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January 15, 2020 | The News

A best-selling Canadian author of 14 books on economic trends, real estate, the financial crisis, personal finance strategies, taxation and politics. Nationally-known speaker and lecturer on macroeconomics, the housing market and investment techniques. He is a licensed Investment Advisor with a fee-based, no-commission Toronto-based practice serving clients across Canada.

And now for the news. Sit, stay and pay attention.

MOMS BUSTED: Yup, the cops moved their squatter butts out of that house in Oakland, California during a morning operation. It took several sheriffs, some guns, 30 SWAT guys and a mini cop-tank to do it, but the Moms4Housing are now kaput. There were four arrests. Supporters milled around. The media showed up. Outrage ensued. And the house, finally vacant after three months of illegal occupation, was boarded up by the corporate owners who will reno, sell and donate the proceeds to charity.

Is housing a human right? Not in California, obviously. You can’t squat and stay. But in Canada, thanks to the current government, it is now a human right. At the same time, Canadians have no constitutional provision to own property. Keep your eye on this.

THEY DON’T CARE: Like you didn’t know this, but a new survey makes it official. Many lenders in Canada, like opioid docs, don’t really care about the impact of their loans. Incredibly, over 40% of financial institutions admit their operations are sales-oriented instead of customer-focused, and clients ‘don’t understand the financial products they purchase.’

Yikes. No wonder close to half of all Millennials would rather deal with an app than a banker, saying they avoid contact with financial types. And no wonder we’re drenched, saturated, pickled and drowning in debt. This survey comes from a credit union (DUCA), so it’s self-serving, but revealing. What is all this debt doing to us?

“Nearly half of borrowers surveyed report that personal debt has impacted their ability to save and build wealth. The report shows a significant number of borrowers surveyed experience stress due to personal debt and are driven to unhealthy behaviours as a result, including trouble sleeping, and poor lifestyle choices like skipping meals, eating unhealthy foods and spending more time alone.”

We knew it. Over-eating, fatigue, criminal behaviour and sexual frustration – it’s all the fault of TNL@TB who made us borrow. Bad, bad bankers. When the revolution arrives, we’re coming for you.

SURPRISE, KIDS: The current rage is MMT – modern monetary theory – which says since governments have the ability to print money, why not crank out enough to pay for all of society’s needs? Education, health and a guaranteed income, for example. Of course the more money, the less all existing money is worth, so the greater the inflation. The other option for spendy governments is to borrow wildly – which is what Ottawa’s chosen to do.

A new report says the Trudeauites added $56 billion to the national debt between 2015 and 2018, and this is set to explode higher. Another $26 billion year. Another $28 billion next year. In fact, there is no timetable whatsoever for the borrowing to stop. Despite coming tax increases, Ottawa will be spending far more than it takes in.

Where does it end?

With future generations, says the Centre for Productivity and Prosperity in Montreal. If interest rates rise a little (will happen) then today’s youth will be tomorrow’s pooched. “All it will take is a few percentage points and the situation could deteriorate quite quickly,” it says. ”The day an economic shock occurs, we’ll have bought ourselves trouble by accumulating a more-or-less useless debt.”

So if you think taxes are high now when national debt service costs equal 7% of federal revenues, just wait and see what happens when they hit 30%. Like the credit union people (above) said, nothing good comes of binging.

OF COURSE YOU CAN: And we have time left for a quick MSU plus a burning question:

Good day Garth, you helped me out a few years ago when selling my house in Ft Mac. I literally made zero money on owning it, and now looking back in hind sight, my sale was an early trigger to a declining market which would only get worse (even before the fires). Thank you for listening, thank you for responding, and thank you for your blog. Anyways, I’m hoping in your infinite wisdom (obligatory sucking up taken care of), you may be able to help me out as Mr. Google hasn’t really been able to directly answer my question.

I have about $40k in no-foreseeable-use-for-it cash currently sitting in a Tangerine account right now. I figured that I’d give it to my wife for her TFSA, but will either of us pay any taxes on that, even if I officially loan her the money and charge her interest? I keep reading that I can gift money to her tax free, but then if she uses that money to invest, I’d be on the hook for the tax bill, but what about if it goes into a TFSA? This is what I can’t find an answer on and I’m hoping you can help me out? I’m assuming the tax man would eventually discover my deposit one day and her transfer to her TFSA the next day. What would you recommend we do here? Thanks! Freezing in Alberta – Chris

Relax. It’s all good. You can certainly fund your squeeze’s TFSA and a spousal loan structure is not required. Just move the funds into her hands (a bank account) then she can put them into a TFSA and invest in growthy assets. There will be no attribution back to you, since all gains will be free of tax within the plan. Remember to make each other ‘successor holder’ (not beneficiary) of each other’s accounts.

If you have money for her to invest in a non-registered account, earning income at her lower tax rate, a spousal loan is the best option. The rate is just 2%. It’s deductible from her taxes. No attribution to you. Just be nice to her. Like always.

Okay, back to watching Animal Planet now. No bankers there.

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January 15th, 2020

Posted In: The Greater Fool

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