Two types of Loonies and 3 reasons why...

In our lifetime we have seen different political philosophies come up against the realities of man’s nature. We witnessed the fall of the Soviet Union and the evolution of China – both claimed to be Communist states but the reality is they were totalitarian states where one succeeded and another failed.

Our political system is called a Democracy based upon the free will of the people but since the time of Joseph Goebbels the message is the media that has control. Today’s internet serves as the same tool of medias dissemination of false information that, if you say it often enough, becomes the truth (for now) until nature steps in. We witness this now as Climate change is used as a buzz word to alter the direction of another media message of Industrialization that ran rampant for the last century. Reality has not yet settled in.

In Canada we have our own realities that are now in conflict with a Federal government under the illusion they were voted in as a majority when they took 39% of the popular vote. Being of a leftist Liberal vein, their dogma professes to create wealth through spending the wealth of what it sees as it’s more advantaged citizens. Unfortunately for business people at this time Mr. Trudeau is being a bit disingenuous. Business leaders themselves can prepare for his rampant spending by adjusting time lines on their business profitability further down the road but the real issue that breaks the whole paradigm is the recent attack on small business and the vilification of the engine that runs our economy.

We have seen right wing politicians espouse the benefits of small business and the sacrifices made by Entrepreneurs. I was one of those Entrepreneurs for many years and I will not get into the sacrifices me and my family made to make it happen but rather focus on the 3 things that almost everyone seems to ignore about money. These truths are as real as the fact your children are destined to grow up and leave home one day (unless there is an intervention).

1) Money is nervous. This should be easy to understand if you held any stock for more than the past 10 years. We have seen markets rise and fall. Even today Facebook faces a drop in value as a decision on it’s marketing approach could drop it’s value in half. So, if you have a dream and are about to take some equity out on your million dollar home in Vancouver to open a business and you hear talk about the Real estate bubble about to burst. Would you take that chance now you know incorporation would not protect you from some Capital gain you are using to start? You have been looking at the Liberal deficits said to be growing the economy but really, are you ready to gamble your stake in a new venture under these economic conditions? Maybe retirement in Costa Rica is a safer way to go?

2) Money is Mobile. In the time of South Africa’s abandonment of Apartheid money fled the country. It was such an issue that a South African banker admitted to me the South African government had someone stationed here undercover in Vancouver in the 1980’s to discover just how new immigrants arriving in Canada got their money out of South Africa. Every time the discussion on money laundering comes up, every time you cross a border and fill in those forms declaring how much currency you got is evidence of the understanding that money can fly the coup at any time and in various ways. Governments know this and work to manipulate the flow and the values of currencies all the time. The US has a long standing issue with China keeping the value of the Yuan artificially low to penetrate foreign markets. This has drawn billions from the US that the Trump administration wants to bring home.

3) Money is not created by governments and the moment they try it affects it’s value. Yes, you can argue governments print the bank notes. In fact many countries have their money printed by Fortress paper (Listed FTB) but that does not determine the value it will hold. Money is generated by the business activity that creates value that supports the currency. If governments could create money and by that extend it to wealth then poverty would have been gone a long time ago. Money’s values is by the efforts of business to create human activity and interest in a product. Proof of this is the billion dollar cosmetic industry based on sham and animal testing when we already know that simply using Lard on you face will improve your complexion over most other products out there. As Canadians we are exposed to the reality that in over 200 years we have been unable to create money or wealth for our aboriginal people. On the positive side it is education and investment that aboriginal people have done on their own that has created any advancement that lasts.

So the Loonie has no value other than what business creates for it...unless you are talking about the Loonies in Ottawa who think they are real valuable. Canada will suffer the consequences and expose itself to exploitation if governments don’t stop meddling