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February 10, 2021 | Comin’ For You

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.

Time for a little catch-up on stuff we’ve mulled here in recent days. The world continues to evolve. It’s dizzying.

First to BTC. As reported yesterday, crazy & rich Elon Musk has thrown a giant wad of money into Bitcoin and says he’ll take the digital ‘currency’ in exchange for a new Tesla, except if you live in Alberta where it’s minus 45 and even the elk are running out of juice.

Predictably, Elon fans and dangerous young people came here to argue Bitcoin (and its offspring) are the future, that fiat currencies will collapse and coders will inherit the earth. The counter-argument is that governments, politicians and central banks will allow a private, unregulated alternative currency to become mainstream just as soon as Doug Ford starts doing Pilates. So, fuggedaboutit.

Well, we have news. If you just bought into BTC at this week’s insane level, too bad. If you made some bank on it, cash in. It’s only a matter of time before CBs squish crypto – at least as it is currently traded.

The recent valuations of Bitcoin, says the Bank of Canada’s deputy government Tim Lane, is “speculative mania.” In fact in a big speech the top banker just linked BTC to tweets, making us all think of Hoodies and Redditers. “The recent spike in prices looks less like a trend and more like a speculative mania — an atmosphere in which one high-profile tweet is enough to trigger a sudden jump in price,” he stated. And this: “Our view remains unchanged: a digital currency is by no means a foregone conclusion.”

What does this mean?

Simple. Digital currencies which are a part of the existing payment system and represent a true medium of exchange as well as a storehouse of value will actually come into existence. But it ain’t Bitcoin. Or Dogecoin. Or Ethereum. Or any of the myriad of others currently being invented by people with manbuns and tats.

Instead, digital money will be brought to you by the same people who are printing the paper (plastic) stuff. It’s no secret of Fed and the BoC, as well as the ECB in Europe have been working on this. Lane admits that the virus and the massive kick that’s given to online commerce is a catalyst. He’s also sending out a signal that if BTC and its spawn become too pervasive, that will also hasten the move.

So CBs will likely give us ‘stablecoins’, digital money whose value is not determined by a Wild West coin exchange (like now) where an Elon Musk message can inflate things instantly, but by an “external asset.” Like fiat money. And if people want digital money, adds Lane, it should be central banks that issue it because, “Only a central bank can guarantee complete safety and universal access, and with public interest — not profits — as the top priority. We will issue such a currency only if and when the time is right.”

More on this is apparently coming tomorrow. Hit the sell button, kids. If you remember your password.

        

Speaking of rubes, let’s turn to GameStop for comic relief.

Was it only a week ago we were watching the failed retailer’s stock rocket to the moon in a great example of crowdfunding manipulation and greater fool theory at work? What a tale. The Hoodies got hoodwinked by r/wallstreetbets promoters and ponzis on Reddit, bought the improbable story that this was about punishing bad hedgies (instead of greed) and piled into an inflated asset with the fundamentals of a road apple.

The inevitable happened. Here it is.

GME stock has been drifting around the $50 mark, which means some $30 billion (a billion is a thousand times a million) in value has been erased since January 21st. Volume of trades has halved and (naturally) the bulk of people who bought on the way up sold on the way down and lost some, most or about all of their money. GameStop has shed 90% of its capitalized value.

Did you learn anything?

        

Okay, so last year the virus gave us a big tax present, which was a long, long delay in paying outstanding balances. Instead of April 30th, it turned into September 1st. But no such luck so far in 2021.

One big item for a lot of people (over half the readers of this pathetic blog, according to our recent survey) is deductions for WFH. There are two ways of claiming them. The easy way is to grab the flat-rate $400 by completing Form T777S and claiming two bucks for every day worked from home. Technically you had to be a WFHer for over 50% of the time during at least four weeks, but nobody’s going to check. So all who want the four hundred dollar deduction can take it.

The less-easy way is to have your employer issue a T2200(S) form declaring you were required to toil outside the workplace at least half the time and expected to pay for related expenses. This allows deductions for all of the costs of an outside private office, or a portion of rent, power, heat, internet fees and maintenance if you work from home (on a square-foot basis). If your compensation is all commission, also claim a portion of insurance, property taxes or equipment leasing costs. No mortgage interest, though.

Don’t make stuff up. Keep receipts. Like with a yellow lab, the odds are low the CRA will kill you. But they’re not zero.

 

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February 10th, 2021

Posted In: The Greater Fool

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