Louis Hornung

Why is Canadian debt wrong?

We have the Banking Act of Canada, that limits how far in debt any Canadian can go, based upon various tests against their income. If someone borrows outside of the banking system, they are on their own. Naturally, factors like developing a disability, or changes in family life are not a consideration for the opinion of this article.

If most Canadians are servicing their debt in agreement with the terms, why is it wrong that they have incurred the debt? If a family is building a future, that might include a recreational property, or recreational equipment, why has an environment been created that forces them to change a plan, because a renewal might make it unaffordable because of higher interest rates.

Raising the interest rates has done little to stop inflation, but it has forced some of the middle income group to cancel some of their plans and dreams, because they’re smart enough to not let things get out of control, other than the interest rates, that are out of their control.

Since the 1990s, it was predicted that the CPP fund for senior citizens of Canada would be extinguished to the point that it couldn’t be counted on to provide anything of value for a senior about to retire, if anything at all. Who started that fear mongering, or predicted the lack of vision that we now face?

Here we are in 2023, and the Federal Government has in the vicinity of somewhere over $575 Billion dollars in a fund somewhere noted as the CPP fund, or investment, and managed by the CPP Investment Board. When it’s somewhere over, is that like $150 Million over, or $600 Million over? How is it decided that a person who has worked for 40 - 50 years, contributing to this fund, should receive $717.15 per month if they retire at 65? What sort of return is that for a lifetime of contributions? Is that how we should thank Canadian seniors for their contribution to building and sustaining our Country?

Economists seem to agree, that raising interest rates to curb inflation, may have worked in the 80s, during a time of entirely different economic influences, but real people now are suffering in ever growing numbers, due to poor decision making by our Government and the Bank of Canada.

They have decided to wipe out more of the already declining middle income segment of our country, thereby widening the gap between the haves, and the have nots. Raising interest rates doesn’t effect the poor, because they can’t borrow money; the banks won’t give it to them. The wealthy have money, so they only borrow it, if that means making more money than it costs to borrow, and more than their investments are already making. Banks love to lend them more.