Bank of Canada’s low rate policy is devaluing our money by allowing runaway asset inflation.

According to Statcan ( Table: 18-10-0004-13 ), CPI went from 103.3 to 140.3, between Jan 2005 – Apr 2021. This works out to an avg annual increase of 1.90%.Looking at the CREA site, we see house prices have increased from ~$233k on Jan 2005, to ~$700k on Apr 2021. This gives us an avg annual increase of 7.00%. Not surprisingly, since 2005, our dollar has lost 78% of its value relative to gold.According to the RBC (https://ift.tt/3i73rV8), it takes 67.6% of the median pre-tax household income to cover the cost of owning a home (aggregate of single family and condo) in Toronto.On the national level, the number is 50.3% of the median pre-tax household income to cover the cost of owning a home (aggregate of single family and condo).Between 1997-2005, when our dollar hovered around $500 ounce of gold and interest rates (overnight rate) averaged 4%, the median pre-tax household income to cover the cost of owning a home averaged just ~35%. Today, interest rates are only 0.25%, yet it takes 50.3% of median pre-tax household income to own a house.The Bank of Canada may have tried to make life more affordable by lowering interest rates since 2005, but the results are in. Their efforts have failed. It was ~50% easier (35% median pre-tax household income to cover the cost of owning a home between 1997 – 2005) VS 50.3% today.The best thing the Bank of Canada could do at this point would be to peg our dollar to the price of gold and call it a day. The idea that devaluing our currency can boost productivity and create real wealth is a failed experiment and needs to end. via /r/canadahousing https://ift.tt/2SwcMeC