THE BANK OF CANADA CREATED A HOUSING BUBBLE, DELIBERATELY.

The Bank of Canada (BOC) deliberately created the housing bubble.

In 2008 the BOC decided to start flooding Canada with ‘cheap credit’ and began cutting interest rates that had remained around 4% since 1995.

The BOC knew the cheap credit would lead to our record levels of household debt and the insane housing bubble. They just didn’t care.

“Men and women can be assured that household debt on its own won’t prompt Poloz to raise interest rates. He was clear last week that he is confident that most new debtors can afford their burden.”

The Bank of Canada governor called elevated debt levels a “side effect” of the central bank’s struggle to boost stagnant economic growth.

“a side effect”

By 2012 the BOC was starting to acknowledge the elephant in the room. “No matter how one looks at it, household debt in Canada is at a record high.” [BOC, 2012]
So what did they do to combat the ‘record levels of household debt’? Well, they lowered interest rates AGAIN in 2015!!! Amazingly, in their 2015 statement the BOC didn’t mention Canadian’s record level of debt or the over-heated housing market once!

It’s not just the Bank of Canada though. Canada’s government is also happy to keep inflating the bubble and record levels of household debt.

Canada is doing the same thing the USA did during their housing bubble! Remember Freddie Mac and Fannie Mae?

In 2008, Fannie and Freddie owned or guaranteed 50% of America’s mortgages. Their bailout cost America 192 Billion USD$.

Since 2001 the Canadian Mortgage and Housing Corporation, run by Canada’s government, guaranteed 400,000,000,000$ worth of mortgages nominally provided by Canada’s banks. The CMHC now ‘guarantees’ ~50% of Canada’s mortgages.

But instead of ‘implicit’ support the CMHC is funded purely from federal tax dollars.

Even the BOC acknowledges this: ‘[Canadian] banks (aren’t) at great risk, because of strong underwriting practices.’

MEANING: Canadian taxpayers are on the hook if the bubble pops, not the banks! (who still get the profit from every single ‘federally guaranteed’ loan!)

The BOC has finally started to realize their mistake; releasing a comical YouTube video urging households to control their debt. Too bad they spent more time worrying about YouTube subscribers than interest rates… which should have been raised years ago!