Forecasting Inflation
Why the Bank of Canada made a mistake!
Accepting that how Canadians live their lives is more important to forecasting than outdated economic models theorize. Until theories are proven they should never be relied upon in policy making decisions. Needless great harm is caused to those least capable of dealing with it. Central Bankers and the Politicians that rely upon Central Bankers guidance have determined that inflation targets should dictate the spending power the average Canadian can access. It is with this understanding that we measure and forecast inflation differently than any others.
Canadian families are rational and prudent people who over time have been forced to accept the pawns they play in greater society. Accepting their fate simply means that they frame their lives to reduce their risk and maintain their quality of life. Canadian families do not buy new cars with three month or 12 month loans but instead reduce risk by entering repayment contracts that equal the warranty period that new car offers. Canadian families enter the homeownership market and reduce their risk during the first five years of ownership by guaranteeing their payments for the first five years.
We accept the wisdom of generations of Canadians and simply seek to measure how their own cost of living can be forecast with as much advance notice as possible. We trust the generational wisdom passed on from one homeowner to the next while accepting the framework they work within eventually will bend to resemble how they interact with it.
Inflation as we Measure Turning Points
In the fall of 2013 the Bank of Canada's newest governor (Poloz of Key Living fame) decided to begin reducing interest rates in only his 2nd quarter at the helm. In early Q2 2014, inflation as we measure it, bottomed and began to climb. A series of rate changes over the following 3 years kept the Inflation Trendline from reversing upwards but in April of 2017 inflation as we measure it began to climb.
To be clear and precise!
We began measuring an increase inflation trend in Q2 2017 and by Q4 2017 the trend of rising inflation was enshrined and inevitable. As of July 2019 inflation crossed above the 2% rate, a data point that is hidden behind the Trend shown here. Trends matter when you are required to consider global impacts on Canadian families and because our measure of inflation is so leading in nature, it only the trend we need to focus on today.
Ask Yourself! Look at the Trend from 2017 through January 2020 in this chart. Would you have not at least been forewarned inflation was 100% on pace to exceed 2%? Would you have at least questioned the risk such a massive reversal of trend would have eventually delivered? Can you see anything in the 13 years from 2004 to 2016 that would have made your next year's guess at inflation worryingly wrong?
It is either ignorance or arrogance or incompetence (IAI) that caused the new Bank of Canada Governor to be unaware of this change in Trend that had been recording increasing inflation since 2017.
We are not qualified to determine whether
- ignorance
- arrogance
- incompetence
is to blame for allowing Canada's Central Bank to have made a mistake and be forced to apologize in 2022.
What we know is
How We See It
and we allow you to come to your own conclusions on what caused no one else to report what you can clearly see in this chart.
Regards
Ross
To be clear and precise!
We began measuring an increase inflation trend in Q2 2017 and by Q4 2017 the trend of rising inflation was enshrined and inevitable. As of July 2019 inflation crossed above the 2% rate, a data point that is hidden behind the Trend shown here. Trends matter when you are required to consider global impacts on Canadian families and because our measure of inflation is so leading in nature, it only the trend we need to focus on today.
Ask Yourself! Look at the Trend from 2017 through January 2020 in this chart. Would you have not at least been forewarned inflation was 100% on pace to exceed 2%? Would you have at least questioned the risk such a massive reversal of trend would have eventually delivered? Can you see anything in the 13 years from 2004 to 2016 that would have made your next year's guess at inflation worryingly wrong?
It is either ignorance or arrogance or incompetence (IAI) that caused the new Bank of Canada Governor to be unaware of this change in Trend that had been recording increasing inflation since 2017.
We are not qualified to determine whether
- ignorance
- arrogance
- incompetence
is to blame for allowing Canada's Central Bank to have made a mistake and be forced to apologize in 2022.
What we know is
How We See It
and we allow you to come to your own conclusions on what caused no one else to report what you can clearly see in this chart.
Regards
Ross
This chart should not be relied upon without direct oversight and insight of RossKay.com
