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Discussion (57 Comments)Read Original on HackerNews
Do I understand correctly that in the interim the are going to try investing some of their borrowed money (which I guess would attempt to make money off the spread between what they can borrow at and portfolio returns)? Or are the building toll highways and airports and other for profit infra (this would be cool). Or is it just some extra bureaucracy and branding tacked on to government spending.
https://en.wikipedia.org/wiki/List_of_largest_companies_in_C...
#1 is Brookfield Corporation.
The now prime minister of Canada headed the ESG there. He is also an international central banker.
Hopefully turns out better than BCRIC.
also why all the love for Canadian Pacific rail?
The Canadian Pacific rail connected the country east to west, was a major milestone in the country's history: <https://en.wikipedia.org/wiki/History_of_the_Canadian_Pacifi...>
And Canada is unrecognizable these days. Why should I think past performance is indicative of future success?
Did they?
Future payments in the short term are covered by inflows.
You might as well maximize the returns now so that in the future when it's not covered by inflows you've acrewed a larger return.
Because I can trivially beat the market by 100% by going long on 2:1 margin.
The volatility is why that's a bad idea.
is that similar to the Ponzi scheme pattern, though?
https://youtu.be/DQgqEFOc894?t=267
If your fund gets consistently lower returns than if you had just stuck everything in a 60/40 portfolio, the whole endeavor has failed.
Thanks to CPPIB, Canada does not have have a giant unfunded pension liability (unlike our neighbors to the south). It has been an enormous success story.
The Australians seem to have the best model overall though. Mandatory payments in to private investments has made them very wealthy.
The UK system takes the national insurance contributions of workers but doesn’t invest them in anything on behalf of the individual. So despite decades of payments you technically have nothing at the end and survive on the goodwill of the government and current taxpayers. That works right now because of the population pyramid.
Canada definitely has a better system than that.
That's how Social Security works in the United States as well.
Is it really a pyramid if the base is less wide than the top? I guess it would be an upside down pyramid, but not very useful for the intended purpose then.
https://www.populationpyramid.net/united-kingdom/2026/
That is how Norway did it
Like, well done. Impressive financial planning at that scale
Whether its perfect or not, it almost has to be better than the current status quo.
Are they going to fund their "wealth" with debt?
This is an oxymoron.
You aren't "rich" if you have $1M and you owe $4M. You're a con-man living a lie that will crush you eventually.
And by the way, if you have -$3M, sorry, but you're the last person I want to invest money with...
Norway gets to have a wealth fund because they have a small population with a massive amount of oil revenue, and they aren't run by morons.
Canada only produces about 2x as much oil as Norway, but it's got 10x the population. Sorry, you can't all be rich like Norwegians unless you start pumping 5x more oil.
Things like this should be laughed off the world stage.
We live in an upside down world.
This seems to be incorrect. Including federal, provincial and local, the debt is about 110% of the GDP.[1]
The US has 3x more debt per citizen than Canada.
[1] https://www.imf.org/external/datamapper/GG_DEBT_GDP@GDD/CAN/...
I'm not sure the simile lands. If that $1M is financing a lavish lifestyle, then you are for all intents and purposes rich. As for the crushing down part, the modern economy shows us one can stay solvent longer than the market is irrational (especially true the more zeros are added to the numbers above).
https://en.wikipedia.org/wiki/Canadian_public_debt this article says it's 57% of GDP. Where are you getting your 300% from?
I guess it benefits my kids though
Both aim to take today's windfall and spend it on something other than hookers and blow.
Norway still does have some totally unjustifiable passion projects, like the coastal highway it's building, but it's doing this from general funds to keep the wealth fund separately managed as a giant pile of investment money that just happens to belong to an investor called 'Norway', while in Saudi Arabia it is an instrument of policy.
This is not a wealth fund at all. This is a debt fund. It doesnt even try to hide the debt that's drowning the federal government.
We are borrowing money to play the stock market.
Historically, this just ends up with Toronto and Montreal (and to a more limited extent, Vancouver) treating the rest of the country as a resource colony. The pretense that consent of the governed is equally geographically distributed is, naturally, very useful to you.
If you do that again, as you did in the '60s, Canada will only be Toronto and Montreal.
So, where most Canadians live?
Now it's not the Federal government and taxpayers propping up the oil industry by buying yet another oil pipeline, but rather a "sovereign wealth fund" (funded by Canadian taxpayers).
To me it sounds less like a "sovereign wealth fund" and more like a domestic infrastructure bank wrapped in populist messaging. I expect plenty of boomers to invest to "stick it to Trump", elbows up!
If Canada ran resources like Norway does, it would have an enormous "excess profit". Norway's royalty rates and "profits" are dramatically higher than Canada where decades of American psyops fooled a bunch of very foolish people that the primary purpose of Canada is to ensure maximum profits for US orgs.
But really, international economics is just mostly made up, and if enough people go along with it then it's as real as real can be.
What is not made up is that if you need to import things from other countries, then you need to export things from your country in proportional value, or else the country as a whole loses purchasing power (i.e. gets poorer). In this case, if Canada is increasing its money supply, then the purchasing power of the currency will go down unless it correspondingly increases demand for its currency (usually by increased demand for its goods and services, including land or businesses in Canada).
The market economy is brilliant.