No Inflation Here, Boss

Putative inflation, as measured by standard methods, remains muted. But I use the term ‘putative’ (“supposed”) advisedly. As I have noted before, if you want to know what inflation is doing, ask the lady of the house, or the one who actually spends the money on a day-to-day basis, to see where and how far it goes. Inflation is far from muted on that basis. My wife and I were a bit dumbstruck, for instance, by a notice from the TD Bank (and Aeroplan) that the cost of using those reward miles has just shot up by a stunning 20%. It is a safe bet that credit card awards do not show up in the inflation statistics but virtually everyone with a credit card gets credit card points awards and they are worth a lot less now. The keepers of the sacred statistics may tell us one thing, but the grocery store tells us quite another. And so – it thus justified – interest rates should remain ultra-low, but the prime beneficiaries of low rates are the governments whose balance sheets remain in an horrific condition. And, please observe, those who are arguing forcefully that rates should not be raised by Yellen & Co. continue to be the agents of governments everywhere, starting with Christine Lagarde, managing director of the IMF, who sees – all too clearly – just how weak the balance sheets are of the vast majority of [European] governments.

So…no inflation? In your dreams.

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About rosshealy

C. Ross Healy, MBA, CFA Chairman, Strategic Analysis Corporation Ross Healy began his investment industry career in 1965 as a securities analyst for Midland Osler Securities. He was a co-founder of Sceptre Investment Council in 1970, a leading Canadian money manager. In 1984, he became Director of Research at Merrill Lynch Canada, and during this time provided support for the late Dr. Verne Atrill, the theorist who decoded the mathematics underlying the Theory of Accounting Dynamics upon which the Strategic Analysis Corporation (SAC) methodology is based. After supporting and collaborating with Dr. Atrill for many years, he joined SAC as Chairman and CEO in 1989 following the death of Dr. Atrill. Ross Healy is a past president of the Toronto CFA Society, and served on the board of the Financial Analysts Federation (now the CFA Institute) as Chairman of the Financial Analysts Journal committee, the academic arm of the CFA Society. He has served on the Financial Disclosure Advisory Board of the Ontario Securities Commission, and was a member of the Executive Committee of Trinity College, University of Toronto, chairing the Investment Committee. He currently serves as the Chairman of the Board of Trustees of Eglinton St. George’s United Church of Toronto. He contributes investment analysis to print, radio, and television media, and has been appearing regularly on Business News Network (BNN) for the past 15 years, and the Canadian Broadcasting Corporation (CBC). There is an award-winning book written about his analysis leading up to the collapse of Nortel Networks (The Bubble and The Bear, How Nortel Burst the Canadian Dream, by Douglas Hunter, Doubleday Canada, 2002. He was the “Bear” in the book.). Email Address: rhealy@strategicanalysis.ca Company Website: www.strategicanalysis.ca Telephone (work): 416-498-3604 x 133 Cell: 416-258-8342
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