Unmasking the Illusion: Economic Myths, Media Manipulation, and the Truth About Gold

Canada’s Market

Statistics Canada recently reported that Canada's gross domestic product (GDP) grew by 0.4 percent in the first quarter of 2024. However, inflation-adjusted GDP per person—a key measure of individual living standards—fell by 0.2 percent to $58,028 during the same period. This discrepancy is mainly due to the country's population growth, which outpaced economic growth, leading to a decline in per capita GDP. Over the past 40 years, such prolonged decreases in living standards have only been exceeded by the recession from mid-1989 to 1994.

Despite the troubling trend of decreasing individual living standards, the mainstream financial media and the Bank of Canada continue to reassure the public that the economy is robust. This narrative, however, may be a form of gaslighting, as it dismisses the real economic struggles Canadians face. While the overall GDP figures show growth, the lived experiences of individuals tell a different story—one of diminishing prosperity and financial well-being. This dissonance between official assurances and actual conditions underscores the need for a more honest and critical evaluation of Canada's economic health.

Is Canada in a Recession?

Gross domestic product (GDP) is a crucial measure of economic growth, and economists often use per-person GDP growth to gauge an economy's vitality and living standards. Canada's recent performance has been dismal, with per-person GDP falling by 3.4 percent in inflation-adjusted terms between the second quarter of 2022 and the final quarter of 2023, indicating a "per capita" recession amid a rising population.

Despite some analysts downplaying the significance of this decline by attributing it to the large influx of newcomers whose incomes might eventually rise, this argument overlooks vital issues. Many newcomers are non-permanent residents, and their incomes may not align with the national average as previous cohorts did. This prolonged economic stagnation has not been addressed by increased government spending and more significant deficits under Prime Minister Trudeau, who previously criticized the Harper administration for similar issues. Trudeau's approach has failed to improve growth, with annual per-person economic growth averaging just 0.3 percent during his tenure compared to 0.5 percent under Harper. This ongoing stagnation in per-person economic progression remains a significant challenge for Canada.

The Reality of U.S. Debt

The U.S. national debt has skyrocketed to unprecedented levels, constituting nearly 300% of GDP when combining public and private debt. A household, credit card, and mortgage debt rise has primarily fuelled this alarming surge. The median new mortgage payment now devours over 40% of the median U.S. household income, underscoring the mounting financial pressure on American families. By comparison, this statistic was a fraction of that 40% in our parents' time.

Simultaneously, the U.S. government is projected to accumulate $1.85 trillion in new debt for Fiscal Year 2024. The situation is further complicated by rising interest rates, with average credit card interest rates reaching 22%. These economic pressures are sparking debates about the sustainability of such aggregate debt levels and the potential consequences of transferring debt from the private to the public sector, a matter of grave concern. So, if you’re wondering if this might be me “gaslighting” you, the answer lies in some of the most significant consumables out there.

Nike's Financial Challenges

Nike, the sportswear and shoe industry giant, is grappling with significant financial challenges, leading to substantial workforce reductions. Recently, the company laid off 732 employees, including:

• 32 vice presidents
• 112 senior directors
• 174 directors

These high-level cuts account for over 40% of the total job losses. Nike's stock price has plummeted to below USD $73 a share, nearing its COVID-19 low of USD $64, a sharp decline from its November 2021 high of over USD $177 and a drop of over 32% this year. Despite being the NFL's exclusive clothing supplier since 2012, with a contract extending to 2027, and the clothing supplier for the NBA, and MLB, Nike's forecast of declining sales has led to a substantial loss in shareholder value, erasing over USD $28 billion in market capitalization in just ten days.

These layoffs and financial troubles underscore Nike's severe difficulties, which are affecting its workforce and investor confidence. Of course, one of the world’s, if not the world’s, largest sports clothing and footwear companies is doing poorly at a time when the headlines tell us all is swell.

John Deere's Relocation to Mexico

John Deere has announced plans to relocate some of its manufacturing operations from the United States to Mexico. Key details of this move include:

1. Relocation of Production: Manufacturing of mid-frame skid steer loaders and compact track loaders will move from Dubuque, Iowa, to a new plant in Ramos, Mexico, operational by 2026.
2. Layoffs: Significant layoffs will affect approximately 610 production workers in Illinois and Iowa by summer 2024, including 280 in East Moline, Illinois, 230 in Davenport, Iowa, and about 100 in Dubuque, Iowa. In 2024, John Deere announced plans to lay off 650 Iowa employees.
3. Reasons for the Move: Rising operational costs, declining market demand, the need to balance workforce requirements in a tight labour market, and the need to free up floor space in Waterloo for new products.
4. Economic Context: The move comes amid challenging conditions in the agricultural sector. The USDA forecasts a decline in farm sector income from $155.9 billion in 2023 to $116.1 billion in 2024, driven by lower crop prices and excess inventory of tractors and combines.
5. Cost Considerations: Lower labour costs in Mexico, where workers earn significantly less than their American counterparts, and lower health insurance costs contribute to the decision.
6. Ongoing Operations: Despite the relocation, John Deere will continue operations in Dubuque, including manufacturing large-frame skid steer loaders, backhoes, and various types of dozers and loaders.

John Deere's move reflects a broader trend of U.S. companies relocating manufacturing to Mexico to take advantage of lower costs while maintaining proximity to the U.S. market. This would only sometimes happen if the market were leading the charge in organic growth-based GDP.

Adopting a new perspective on wealth strategy is crucial to break free from the cycle of poor economic performance. The old methods have yielded unsatisfactory results, and expecting different outcomes from the same approach is unwise. Diversifying your wealth by incorporating physical gold and silver, raw land, collectibles, 24K pure gold wearable wealth, and coloured diamonds can set you apart from the mainstream, which currently appears uncertain and fragile. Delta Harbour Assets emphasizes the importance of being above average, encouraging clients to think outside the box and explore alternative assets. This proactive and diversified approach can provide stability and growth, helping you distinguish yourself from the conventional path and navigate the current economic landscape more confidently. Now you know. What you do with this is up to you.

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Yours to the penny,

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Darren V. Long