Sunday mornings are usually quiet in the neighborhood, this being an older part of the city. We aren’t urban or really suburban here, either. This had been a small farm town of a single main street and a few houses built in the twenties. A few more houses would be built in the forties before that small push of the fifties added twice the number. The lot sizes here are a very mixed group with a few over an acre and perhaps as many as a fifth at least a quarter acre in size. Considering that the modern suburban lot size is anywhere from seven thousand to nine thousand square feet, my lot at considerably more feels luxurious. As for the tiny lots, those in the seven to eight thousand square foot range, they are small in number. Most of the neighborhood still has that rural feel that makes us stand out from the sprawl of the city. As a result of the mix of real estate ages and sizes, the average price per house is lower and gentrification has not made great inroads. We would need quite a few high income families to come in, buy and renovate or raze the stock of housing before the prices tripled out of control. But that would change its charm, ruin its character. We’ll leave that for another generation to inflate that housing bubble, if they ever do.
Meanwhile the jays and other loudmouth birds have been quiet this morning, only a few vehicles passing, most on the way to church. In this part of the country church is a big deal, a part of one’s childhood and a social gathering oasis for many. The religious mix in this metropolitan area ranges from the small tiny neighborhood meeting room of ten or twenty worshipers to the huge block enclosed industrial sized mega churches that more resemble factories of believers on conveyor lines heading for the eternal dock to await shipping to promised land. We also have sufficient numbers of non believers and unbelievers, the difference between the two may seem trite but the unbeliever is usually in direct opposition to the believer and only needs a small miracle to turn around in belief. Like in politics, an unbeliever used to be a party member but has briefly turned his back. The non believer has no use for either party and chooses to be independent of both. The non believer is the bane of both religion and politics.
So it is when you have been schooled in a belief system and become a member of the elite that your beliefs must remain within the bounds of propriety. To entertain any thoughts counter to good doctrine is to commit heresy in all its hideous forms. So Janet Yellen must preach the faith of GDP improvement and prosperity regardless of any evidence to the contrary. When one is paid to preach the word of god one cannot mention any evidence against the existence of god. Thus, even though Canada is in a very bad recession and is our largest trading partner, this cannot be seen as a drag on this year’s GDP when its elevation has been ordained by our President and his political party. Indeed, the message by Biden is that democrats need to take responsibility for the fate of this GDP and preach its success to the faithful, who are in need of far more hope than was ever promised in 2008. The consumer shall lead ye and the lamb to the promise land and restore the years of milk and honey and rotten teeth. Ah, if only it was an increase in healthcare expenses that would lead the way to financial happiness we’d be there already.
But the Canadian dollar is only worth seventy nine cents on the American dollar and it was not but a few years ago that it traded at a buck ten to our one dollar. Did the Canuck lose his faith or did the bubbles that infected our economy finally infect his and now they are bursting. What ever the case, the Bank of Canada has fed the bubbles and now reaps the wind of their bursting. All across the world central banks are easing quantitatively, reducing interest rates and funneling more government spending into debt. I fear that it was debt that took us to the dance and will take us home although home may not be what it use to be. Prosperity has snubbed our advances and we are left with debt as out partner. Well, at least we have that last fling in Mexico as the Peso drops in value, almost fifteen to a dollar and it may go higher. Tequila for every gringo. We can now buy the world very cheaply, a long as the money or credit lasts. After that, we are on our own. Foreign exchange is a relative value. What is a dollar worth in terms of a pound of beef or a bushel of wheat? How much Greek olive oil will it purchase if no one else wants the dollar? Will you let me eat your hamburger today for a dollar on Thursday? Ah, the Wimpy Theory of Foreign Exchange Trade. A hamburger in hand is worth two dollars in the bush.
As the world’s economies start decoupling, meaning they buy and sell fewer goods and services to other economies, their relative currencies have a more difficult time finding an exchange value. Yes, those economists who have trained under the influence of Kanye’s have as much said that gold, as a unit of currency value, should be banned. It is true that gold has little value other than as a scarce metal that is only good for ornamentation and electronics. But it is a scarce metal as is silver and platinum. It’s like a rule by which one can measure divisions of space in terms of length. One rule may be good only in measuring on a metric scale and another only good for feet and yards. But we can find a third rule by which to convert one into the other. That is the problem with Fiat currency, there is no third rule for conversion, there is only an economy’s word for its worth. And as House would say, Economies lie, particularly when government statistics don’t tell the truth. Don’t worry, we are all racing for the bottom, winning in this game is not a big priority.