Evidence of this shift is visible. In one study, consumers were more likely to be influenced by skincare and beauty influencers than by dermatologists, although labeling someone an “expert influencer” did improve trust. Similarly, the Ontario Securities Commission found that about 35% of respondents reported making a financial decision based on advice from a finance influencer.

It’s not difficult to understand why.

For one, influencer advice is easier to access. On the surface, this is a clear benefit. Experts can be costly, while non-experts are free, charismatic, and relatable. Advice has been democratized, and anyone can learn from someone who appears to have succeeded at something.

But in that process, something subtle happens. Consumers of the advice mistake anecdotes for evidence, and they themselves become more confident in their knowledge.

Another consideration is how credibility is signaled. Experts rely on credentials, training and experience. Content creators, on the other hand, lead with visible outcomes that consumers may find more compelling.

A beauty influencer with glowing “glass skin”, or a finance creator sharing their trading account balance will naturally have greater pull. That kind of personal proof often feels more compelling than abstract knowledge or data.

At the same time, experts speak in probabilities, hedging their advice appropriately (“it depends on individual factors”, “in most cases”, “may not be appropriate for everyone”), while non-experts tend to speak confidently, in certainties without qualifiers or nuance.

That certainty is easier to sell to an audience that cannot distinguish confidence from expertise. Over time, low quality advice crowds out more rigorous expert insight.

As people spend more time on social media, the implications of this can be dire, as they begin to conflate misinformation with sound advice. A 2025 study in the UK found that roughly half of the top 100 videos on TikTok offering advice on trauma, depression, anxiety and other serious mental health conditions contained some form of misinformation.

Even where advice is directionally correct, oversimplification creates its own problem.

In finance, for example, much of the content revolves around a familiar set of ideas: save more, invest in a handful of low-cost ETFs, pay off high-interest debt. While useful, this repetition creates an illusion of completeness, as though financial decision-making is simple and universally applicable.

It isn’t.

This in turn creates overconfident consumers of finance content.

The value of true expertise lies in both depth and breadth. While content creators often focus on what is broadly applicable and easily digestible, experts are trained to assess individual circumstances and provide tailored solutions. Those who operate within professional frameworks are also bound by ethical and professional standards designed to protect the consumer.

The cost of bad advice is oftentimes not immediately apparent. It compounds in suboptimal decisions, misapplied strategies, and missed opportunities. And by the time it becomes visible, it is often too late to fully undo.

Ultimately, the value of expertise has not diminished. But it has been diluted by the illusion of expertise.

Nowhere is this more true than in the financial system. The U.S. dollar and Treasury market are critical to global finance, meaning instability in U.S. institutions can quickly spill across borders.

Independence Under Threat

Over the past months, Trump has repeatedly pressured Fed chair Jerome Powell to cut interest rates, taking to social media with criticisms that included calling him a ‘moron,’ a ‘stubborn mule,’ and mocking him as ‘too late Jerome’.

Powell’s refusal to yield to political pressure was critical. At a time when the credibility of other U.S. institutions including the media, universities, and more recently, the Bureau of Labor Statistics, was under attack, the Fed stood firm.

Central bank independence is essential to keeping inflation under control. Unlike politicians with short electoral horizons, the Fed is mandated to take the long view: maintaining price stability, supporting employment, and protecting the credibility of the financial system.

That credibility is what anchors inflation expectations. Investors lending to the U.S. government demand compensation based on what they believe inflation will be in the future. If faith in the Fed erodes, investors will demand higher yields.

Rising U.S. yields will likely spill over globally, pushing up borrowing costs for governments, households, and businesses in Canada, Europe, the U.K., and beyond, underscoring the role of treasuries as the world’s reference safe asset, or “risk-free” benchmark.

Why Cook’s Removal Matters

Trump is now seeking to remove Fed Governor Lisa Cook, citing allegations of mortgage fraud. As with earlier threats to remove Powell, the legality is uncertain and will ultimately be decided by the courts

If Cook were expelled, Trump would likely replace her with a more politically aligned nominee, giving him a 4–3 majority on the seven-member Board of Governors. Even if that outcome doesn’t materialize, the optics alone are damaging: the very perception that monetary policy could be bent to political will undermines trust in the Fed’s independence.

Trump already has some likely allies on the Board, including governors he appointed in his first term, as well as his new nominee and advisor, Stephen Miran, who has openly supported his calls for rate cuts. As Trump said this week:

“Once we have a majority, housing is going to swing, and it’s going to be great . . . we have to get the rates down a little bit, and when we do, it’s going to [make] a tremendous difference.”

If a Fed majority were to act in line with political pressure rather than economic fundamentals, inflation expectations could decouple from the Fed’s 2% target. That would mean higher long-term interest rates, even if short-term policy rates were cut. For borrowers, households, and governments globally, this translates into more expensive debt.

The Bottom line

Inflation may reduce the real burden of U.S. federal debt, but it erodes household purchasing power and raises borrowing costs across the economy. Worse, if the Fed is seen as just another political arm of government, its credibility, the foundation of the financial system, would be at risk.

For economists, investors, and ordinary households alike, the prospect of a politicized Federal Reserve is not just an American issue. It’s a global one.

Fast forward to 2025, and AI thought leaders now warn that that future is less than 5 years away, each offering their view of what the future looks like, ranging from optimistic to existential.

Bill Gates on The Tonight Show, predicted that only three jobs will survive the AI wave: coders, energy specialists, and biologists.

Given the primary objective to maximize profit in a capitalist system, there is no doubt that corporate leaders will slash costs the moment reliable AI alternatives become available, potentially leading to job losses on a scale we haven’t seen before.

Automation itself isn’t new. Over the past century, we’ve seen farms mechanized, factories automated, and banks digitized. What’s different now is speed and scope. This time, the displacement won’t be gradual or industry-by-industry. It could be sudden, sweeping across white-collar and service jobs alike.

Dario Amodei, CEO of Anthropic, a leading AI research company predicts that U.S. unemployment will rise to 20 per cent (up from 4.2 per cent), with significant job losses in tech, finance, and law, and 50 per cent of entry level jobs wiped out.

In countries like the U.S. and Canada where just over 80 per cent of jobs are in services, the proliferation of AI agents capable of carrying out repetitive and analytical tasks means that a large percentage of these jobs can be replaced within the next few years.

A 20% loss in service jobs alone in the U.S. will add about 27.5 million more unemployed people to the current unemployed count of 7.2 million. In Canada, a 20% loss in service jobs would push unemployment from 1.5 million to roughly 4.5 million people, a threefold increase.

Not even jobs in the goods producing sectors are safe, with advancements in robotics trailing not too far behind AI. Elon Musk predicts that robots will be in homes within the next five years, making their arrival in factories equally imminent.

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The Capitalist’s Utopia

OpenAI’s Sam Altman paints an optimistic picture of a world where work is optional. Altman, in a 2021 post that reads like a manifesto for the future he is now designing, wrote:

"This revolution will generate enough wealth for everyone to have what they need, if we as a society manage it responsibly."

That is a big “if”. This vision calls for an outsized role for governments and demands massive innovation, coordination, and consensus, particularly around the necessary redistribution of wealth. Altman speaks of AI doctors and AI teachers in this fanciful future where wealth is redistributed through shares in AI companies making everyone equity owners in this nouveau capitalist design.

While futurists laud the liberation of workers, it is also the case that capitalism is being liberated from workers, given the human propensity to get hurt, needing time to heal, vacation days, and asking for pay raises. But what does this “liberation” mean for the majority?

There are other ways this could go…

Altman predicts that Americans could receive an annual allocation of $13,500, which will supposedly be enough to have all they need in a low cost AI economy with no jobs. Bill Gates predicts humans will no longer be needed for most things, with advanced AI capable of everything from folding laundry to writing novels.

Yet a more hopeful path exists. One where AI is used to augment human productivity and ingenuity, not to replace it. It is inevitable that certain jobs will cease to exist while others are radically transformed.

But a complete takeover that makes humans surplus to requirements deserves serious scrutiny. Especially when the majority are expected to be content living on $13,500 a year, fending off existential dread while struggling to find purpose in a world with shrinking opportunities and a growing loss of control over their own futures.

But even if we are headed towards a society that depends on a universal basic income, the active participation of democratically elected governments in designing that future is paramount. This allows for social impact consideration and designing a UBI system that caters to the majority.

The transition is the danger zone

Regardless of what future lies ahead, it is reasonable to expect job displacements over the next few years.

Yes, AI could bring significant benefits: productivity gains, lower costs, even new industries. But governments appear woefully unprepared for the pace and scale of disruption. Meeting this challenge may require rethinking employment insurance, designing fiscal tools to absorb economic shocks, and investing in large-scale, effective retraining programs. Without proper planning, governments risk mass social unrest.

On the individual level, it is evident that only the enterprising will thrive if the scale of disruption is as bad as is being predicted.

The brutal truth is, most people are not naturally entrepreneurial. In the U.S., just under 6% of workers are self-employed; in Canada, 13%. Even with drive and skill, finding new work will be hard if millions are competing for the same limited opportunities.

Hedge fund manager Ray Dalio who has been sounding the alarm suggested AI could wipe out 40% of jobs. If four in ten people are unemployed, “pivoting” into enterprise becomes that much more difficult.

Still, the rise in side hustles over recent years may offer some hope. According to recent surveys results, over 50 per cent of Canadians & 27 per cent of Americans reported having a side hustle, a trend that could help individuals adapt to a rapidly changing job market.

So far, changes to the workforce are occurring in little pockets, with jobs disappearing as a result of AI. Klarna CEO reported reducing the company’s headcount by almost 40 per cent, from about 5,000 workers to 3,000 workers due in part to their adoption of AI tools.

Fortunately, there are no definitive signs that AI is displacing workers at scale as yet. Although, early signs may be clouded by increased global economic uncertainty and already soft labor markets across most G7 countries.

Final word

There is a possibility that AI simply gets integrated into our work and lives, a human-centric, trustworthy and responsible AI as was promoted at a global AI safety summit hosted by the UK two years ago.

Whatever the case, governments have a crucial role to play. The future of work leisure is contingent upon the effective redistribution of wealth from the AI economy, to the rest of society.

All things considered, it is clear that the future belongs to the enterprising. The ability to adapt and create value for the owners of capital beyond the capabilities of AI and robots will be highly rewarding for those who succeed.

Meanwhile, for the rest of society, if UBI systems fail, perhaps we see a regression to subsistence living, consisting of small scale farming, odd jobs, and trade by barter.

Ultimately, I believe the most difficult part of this is in the transition period. The period where people may begin to lose their jobs, and employment insurance systems become strained as people struggle to find their footing. In all of this, it is crucial to remain nimble, ready to learn and adapt.

Standing in the Rose Garden, Trump declared:

“The nations that treat us badly, we will calculate the combined rate of all their tariffs, non-monetary barriers, and other forms of cheating”

To drive the point home, he hoisted a large board listing supposed tariff rates charged on U.S. goods. But almost immediately, analysts noticed something was off. The numbers didn’t line up with actual trade data, and then came the reveal of the formula behind the claims: a baffling ratio of the U.S. trade deficit with a country to the value of imports from that country.

In this logic, if the U.S. imports $100 billion from a country and exports $50 billion, that’s seen as a 50% effective tariff being charged on the U.S by the trading partner. This is, of course, not what a tariff is.

Effectively, the administration treated trade deficits-when the U.S. buys more from a country than it sells-as proof of that country “cheating.” The solution? Slap on retaliatory tariffs calculated from this crude metric.

For the 115 countries with which the U.S. runs a trade surplus that is, by Trump’s logic, the ones the U.S. is “cheating”, the administration appeared to simply assume they imposed a 10% tariff on U.S. exports regardless of whether the country actually has trade restrictions against the U.S. In turn, the Trump administration imposed a blanket 10% “retaliatory” tariff.

The Debt Refinance Motive

Now let’s zoom out.

The U.S. government debt stands at $36 trillion, with over 11% of annual budget spending going to debt servicing. The annual deficit-the excess of spending over revenue-currently sits above $1.1 trillion. Enter a speculated three-pronged strategy for financial redress:

1. Tariffs to raise revenue.

2. Tax cuts to cushion impact of tariffs on American households.

3. DOGE to cut government spending by $4 billion per day.

Following the stock market sell-off triggered by the tariff announcement, supporters suggested a fourth strategy intentionally masterminded by the administration, the refinancing motive.

Over the remainder of 2025, nearly $9 trillion of U.S. government debt will mature and need refinancing at prevailing market rates. The tariff-driven uncertainty has already rattled consumers and businesses, dampening confidence and pushing bond yields down.

Lower yields mean cheaper borrowing. Making simple assumptions about how long yields stay suppressed, the U.S. could refinance its debt at lower costs, saving up to $500 billion over the next decade, or $50 billion per year.

To recap: through the chaos of Phase 1 of this “grande strategy,” the government engineered market fear that wiped out over $10 trillion in private wealth via falling equity markets dealing heavy blows to retirement accounts, to save itself an estimated $50 billion a year in interest payments.

Balancing the Numbers

The stock market will eventually recover and make up its losses-hopefully in short order. But uncertainty doesn’t just affect the stock market. It stalls the real economy.

Businesses delay expansions. Mergers and acquisitions are postponed. Households pull back on major purchases. Essentially, the private sector is paralyzed while the public sector tries to balance its books through what supporters insist is engineered chaos.

Looking at the other tools in the Trump playbook, let’s consider the best-case scenario:

• DOGE delivers $4B in daily spending cuts, or $1 trillion by year-end

• Tariffs raise $620 billion in the first year and $5.5 trillion over a decade (per Capital Economics)

• TCJA-style tax cuts return, offering modest personal savings but costing the government $4 trillion over ten years

Even in this optimistic projection, and ignoring the possibility that DOGE’s indiscriminate cuts reduce government efficiency or revenue collection, the revenue and cost savings would only partially offset the economic slowdown and tax cut costs.

The reckless implementation of tariffs, eerily reminiscent of DOGE’s haphazard cuts, creates a high-stakes gamble with limited room for error.

All Those Great Manufacturing Jobs

Manufacturing has long been at the heart of U.S. economic nostalgia. But the numbers tell a different story.

Since its peak in 1979 with 19.5 million workers, U.S. manufacturing employment has dropped to under 13 million. Germany has seen similar declines. As other sectors expanded, U.S. manufacturing stagnated and began its long, steady decline in the late 2000s.

Despite the rhetoric of a manufacturing renaissance, the U.S. is currently at or near full employment. Immigration restrictions have shrunk the labor pool. American manufacturers are already struggling to find workers.

So who’s going to do these jobs?

If the Trump administration is serious about restoring manufacturing, it faces labor shortages, mismatched skills, and the need for massive financial incentives and retraining of workers.

Assuming the promise to bring back manufacturing jobs is genuine-despite there already being so many manufacturing jobs that nobody wants-, perhaps the plan is to absorb and retrain laid-off federal workers from DOGE cuts to fill manufacturing roles. The catch? That’ll take years. So will building new factories.

Meanwhile, uncertainty created by the administration’s erratic policymaking may delay investment in U.S. manufacturing, as businesses try to interpret government intentions.

In the meantime, tariffs will drive up the cost of raw materials and intermediate goods, causing the price of products manufactured in the U.S. to soar. Add in labor shortages and increased domestic demand due to import substitution, and the result is sharply higher prices for American households, whether you buy American or foreign.

Who Pays?

The rich may cut back on discretionary spending. The poor—who spend most of their income on essentials—will feel the squeeze. Ironically, the working class, whom these tariffs aim to protect, may end up paying the most.

If tariffs persist and manufacturers do bring production back, they’ll do so at a steep cost. A product made by a $68,000-a-year U.S. worker can’t compete price-wise with one made for $15,000 in Mexico or $10,000 in China. Consumers won’t be paying for better quality, they will be paying to subsidize inefficiency.

Reduced imports due to tariffs would also mean reduced demand for foreign currencies and a stronger USD. Making already expensive U.S. manufactured products even more expensive abroad, hurting American exports and increasing U.S. trade deficits. In other words, the exact opposite of what the Trump administration is aiming for.

It’s likely that companies opening U.S. factories will reserve those facilities to serve the U.S. and a few wealthy markets, while maintaining cheaper production hubs abroad for everyone else.

The result? A check on U.S. consumerism and, potentially, a significant drag on growth. And since consumer spending is the main driver of U.S. GDP, this could ripple across the economy.

Ultimately, the Trump administration’s attempt to redistribute wealth from the poorer countries it trades with to itself will likely leave everyone worse off.

Globally, decreased U.S. demand for foreign goods could tip trading partners into a recession, which will feed back into lower demand for U.S. made products. Domestically, Americans may cut back on spending altogether, limiting gains from reshoring.

Final Thoughts

In many ways, this is a grand experiment. The U.S. is supposedly using policy-induced uncertainty to refinance its debt at cheaper interest rates, it is funding tax cuts with tariff revenues, and attempting a manufacturing comeback, all while rattling global trade norms.

Will it work? Will it implode? One thing’s certain, there’s no clear winner yet.

But perhaps you see one. Drop your thoughts below.

The overarching goal of DOGE is clear: reduce government spending. This has led to the dismantling of USAID, cuts to the Department of Education, and an aggressive push toward downsizing. But despite its name, it remains unclear whether “efficiency” is truly a guiding principle of DOGE or just a convenient pretext for indiscriminate slashing of government programs.

Is Government Inefficiency Always a Problem?

While efficiency is a core principle for corporations, in government, efficiency is not always the primary objective and in many cases, inefficiency serves a deliberate and necessary purpose.

Governments exist to serve all citizens, not just the most profitable segments of the population. Unlike businesses that can abandon unprofitable ventures, governments must provide essential services even when it is inefficient to do so. This includes funding schools in remote areas, maintaining infrastructure that may not generate revenue, and running social programs that do not yield immediate economic returns.

Some inefficiencies are intentional safeguards. Regulatory oversight may slow decision-making, but it prevents corruption, reckless cost-cutting, and corporate abuse. Bureaucratic processes protect public funds, ensure accountability, and uphold democracy. A government that prioritizes efficiency above all risks stripping away these protections, making it a tool for the wealthy and powerful, rather than a guardian of public interest.

The Flawed Corporate Lens on Government

A real danger arises when those tasked with improving efficiency fail to distinguish between the role of governments and corporations. Take Chamath Palihapitiya, billionaire venture capitalist and staunch supporter of DOGE, and his recent assertion that the U.S. government is “deeply unprofitable.” This assertion was promptly co-signed by a quoted retweet from Musk. A critique as nonsensical as calling a business “deeply unbenevolent.”

A government’s success is not measured by profit margins but by economic stability, public welfare, and national security. While eliminating genuine waste is important, applying corporate-style cost-cutting to essential public services can create more harm than good. A company that lays off workers to improve efficiency might see a boost in its stock price—but a government that indiscriminately slashes programs could leave millions without access to quality education, healthcare, or life saving support payments.

The Hypocrisy of Billionaire Beneficiaries

Often, the government acts as an investor, assuming risks that private entities avoid. While taxpayers fund these risks, the financial rewards overwhelmingly flow to private companies. NASA’s advancements in space exploration, the Department of Defense’s development of GPS, and the pioneering of the internet are all government-funded investments that have laid the foundation for the success of corporations like SpaceX, Google, and Apple. SpaceX, for example, would not exist in its current form without billions in NASA contracts and government-funded research.

Government subsidies have also played a crucial role in corporate success. Musk’s SpaceX and Tesla have received billions in taxpayer-funded support. Tesla alone has been the recipient of an estimated $2.8 billion in subsidies. Unlike venture capitalists, the government does not get to participate in the profits of the companies it invests in. This stands in stark contrast to Chamath’s stated concerns about government profitability in a tweet co-signed by Musk—an irony lost on DOGE’s leadership.

A Stacked Deck: Who Benefits From “Efficiency” Cuts?

DOGE’s cuts, which fulfil a lot of Trump’s campaign promises, reveal a troubling pattern. The cancellation of $1bn in the Department of Education contracts effectively terminating its research branch is a missed opportunity to leverage the agency to improve the delivery of education and address the troubling issue of U.S. students falling behind their peers- a worthy investment for the future of U.S. economic prosperity and competitiveness. Is it more efficient for states to individually take this on?

The gutting of USAID, an agency that fights infectious diseases, counteracts foreign influence, and strengthens U.S. alliances has been supported by claims of waste and fraud. Although cutting the entire agency barely dents the federal budget-USAID made up just 0.4% of government spending in 2024-its elimination carries some risks, from declining global health outcomes to refugee crises. The resulting weakening of global stability will likely result in greater costs to the U.S. in the future.

Worse still, DOGE’s approach appears reckless, driven by a mix of ideological zeal, a lack of expertise, and a haphazard execution that undermines its stated goals. After slashing USAID funding, Musk admitted that some critical programs-including Ebola prevention-were mistakenly cut. The demonstrated lack of precision in the execution of DOGE operations suggests that those leading the effort may be in over their heads. A truly efficient approach would have involved a targeted review of waste rather than a blunt-force reduction. Government functions, far more complex than cost-cutting at Tesla or Twitter, require expertise and nuance. Lives are at stake.

The Consumer Financial Protection Bureau (CFPB), another DOGE target, was created after the 2008 financial crisis to prevent banks and lenders from exploiting consumers. The CFPB, with 1,750 employees and a $758 million budget, has saved Americans $21 billion in canceled debts, fraud restitution, and lawsuits against corporate misconduct.

Musk’s own venture into financial services through X money would have fallen under the CFPB’s regulatory oversight. Now with blunted teeth, a reduced work force and limited scope, the powers of the agency have been stripped in an amazing win for Wall street against ordinary Americans.

The Cost of a Billionaire-Led Government

In the midst of this push for efficiency, the Trump administration is planning to extend the 2017 Tax Cuts and Jobs Act. This plan delivers minimal savings—$273 for those earning under $50,000, less than $1,000 for middle-income households, but over $78,000 for millionaires. The tax cuts will be financed by proposed cuts to Medicaid, taxes on tuition scholarships, and reductions to the Supplemental Nutrition Assistance Program (SNAP).

Given that the U.S. government deficit is already at $1.1 trillion halfway through the 2025 fiscal year, approaching the $1.8 trillion deficit of the previous year, it makes sense to curb excess spending. However, determining what needs to be cut should involve people who understand the role of government in fostering economic prosperity and protecting the welfare of citizens. Cuts should be executed with precision and an understanding of their broader impact—rather than as an ideological campaign against government itself.

If DOGE’s unchecked crusade continues, the wealthy will see their fortunes protected while essential services for ordinary Americans vanish—all in the name of so-called efficiency.

Whether they take effect immediately or the wheels are merely set in motion, Canadians must be ready. These tariffs won’t just shake up trade policy—they’ll hit households, businesses, and the economy at large, bearing in mind that Canada’s exports to the U.S. are worth about 20% of the size of the Canadian economy.

While Canada and the U.S. are each other’s biggest export markets, Canada is much more exposed to tariffs imposed on it by the U.S. as the country sells 76% of its goods exports to the U.S., while the U.S. exports less than 17% of its goods to Canada. The implication of that being that threats of retaliation will not deter a determined Trump.

As Canada tries to meet U.S. demands to tighten border security given how devastating a 25% tariff on 76% on its exports will be, it is quickly becoming evident that Trump’s motives go beyond border security. He has been pretty open about what really bothers him— the trade deficit, the fact that the U.S. buys more from Canada than it sells.

Canada’s biggest export to the U.S. is energy products. And while the U.S. is the world’s top oil producer, it doesn’t produce enough to meet its own demand. In 2024 (through November), the U.S. imported 2.2 billion barrels of crude oil, with 63% coming from Canada and another 7% from Mexico, according to the U.S. Census Bureau. In other words, a big chunk of the trade deficit that frustrates Trump exists because Canada is supplying a resource America needs. How Trump has come to interpret this as giving “massive subsidies to Canada” is left to anyone to try to determine.

As if the world (and Canada) needed more data to anger Mr. Trump, recently released data on the U.S. goods trade deficit showed that the trade deficit reached a record level in December possibly due to people front-running tariffs. The data release shows U.S. imports rising 3.9% and exports falling 4.5%.

To most, it is hardly a surprise that a prosperous, high-consumption economy like the U.S.—nearly ten times the size of Canada—buys more from its resource-rich neighbor than it sells. But that doesn’t seem to matter. Even if tariff threats are being used by Trump as a negotiation tactic as some believe, it still bears being worried that tariffs will in fact be imposed for at least some period of time.

A weak-er loonie

Canadians who have recently visited the U.S. likely felt the sting of the weak loonie. As if paying 1.44 Canadian dollars per USD was not painful enough, Trump’s 25% tariff is expected to weaken the loonie even more. Some economists predict the exchange rate could slide to $1.60 CAD/USD making everything from cars and food to vacationing in the U.S. more expensive.

The same goes for machinery used in business production which are among Canada’s main imports from the U.S. This has far reaching consequences since increase in the cost of capital goods used in making products will reduce Canadian business investment, and ultimately lead to job losses.

With that said, since a weaker currency makes Canadian goods cheaper for U.S. buyers, it could help offset some of the impact of tariffs. Some industries with export markets outside the U.S. will also benefit from a weaker loonie as it will make their products more competitive globally, however, it is important to point out how few winners there will be.

Rocky road ahead for Canadian Businesses

Considering what constitutes the bulk of Canadian exports to the U.S., the hardest hit industries will be the oil and gas sector and the auto industry. You’d think the oil sector would be safe—since the U.S. relies heavily on Canadian energy and higher prices would spark backlash from American consumers. But according to Trump, even oil could be subject to 25% tariff.

Many continue to hold on to the belief that oil will be spared from tariffs, but there’s no such optimism for the auto industry. As auto parts typically cross North American borders multiple times during their production phase due to highly integrated supply chains, if tariffs are imposed at each U.S. border crossing, costs will skyrocket dealing a strong blow to Canada’s auto industry.

The auto sector won’t be the only one feeling the squeeze. Across industries, Canadian businesses will have to decide how to handle the added costs—either by lowering prices to stay competitive or passing the tariffs onto U.S. buyers. Either way, exports will take a hit, business profits will shrink, and job losses will follow.

An Exodus?

With the options being to pass on the import tax to U.S. importers and American consumers and risk losing customers, or to take on all or some of the tariffs thereby decreasing their own profits, some Canadian producers may find it easier to relocate their business across the border to the U.S., taking their jobs along with them.

Consumer and Business confidence shot

Given the amount of uncertainty around these tariffs—whether they’ll happen, how they’ll be enforced, and what they’ll mean for the economy—consumer confidence which is already shaken by elevated post-pandemic prices and a weak job market, will likely take another hit.

We have seen some of this play out, although there is likely more to come. Confidence dropped significantly in November and December last year after Trump announced plans to impose 25% tariffs on imports from Canada.

When consumer confidence is low, households spend less and save more, causing business profits to decline. At the same time, low business confidence will also play a part in slowing economic growth as businesses hold off on making investments, expanding operations or hiring workers.

The household struggle continues: a resurgence of inflation, a recession, or both

With many households still reeling from the significant rise in prices that came after the pandemic despite wages also rising, it looks like things could get worse.

Tariffs will weaken the loonie making U.S. imports more expensive, raising prices for businesses and Canadian families on several things from food to machinery. If Canada retaliates, tariffs placed on U.S. imports will cause a further rise in prices. Note that 62% of Canadian imports come from the U.S, and so far, both conservative and liberal candidates have communicated a strong willingness to retaliate.

The combined effect of a sustained 25% tariff and retaliatory tariffs will likely push Canada into a recession. Higher prices of imported goods will reduce household disposable income and business profits. With lower household spending and business profits, unemployment will likely rise as businesses lay off workers to cut costs.

It is probably fair to say the Bank of Canada is also grappling with the uncertainty surrounding tariffs and their impact. Considering the combined effect of a weakening economy (which calls for lowering interest rates) with rising prices and a weakening currency (both of which call for raising rates), and given the lessons learnt from their response during the pandemic, they may be less keen to act one way or the other.

As if there was not enough to consider, the effect of interest rate decisions on homeowners will also likely be of interest. Over 2025 and 2026, a significant number of mortgages will come up for renewal in what has been described as the mortgage renewal wall.

CMHC reports that 1.2 million mortgages are coming up for renewal in 2025 and at least 85% of these mortgages were obtained when the policy interest rate was 1%. For these group of people, some of whose jobs may also be affected by tariffs directly or indirectly, the decision to hold rates steady or raise them could have serious consequences.

The possibility of the Canadian government providing support to individuals and businesses whose income will be affected by tariffs has been floating around, but if the tariffs are as broad as threatened, the government, hindered by the goal of keeping debt and deficits low, may have very limited budgetary capacity to provide these supports.

While Americans await his inauguration, world leaders are scrambling to develop strategies to counter the incoming president’s proposed policies, with tariffs emerging as a major concern. The renewed concern over inflation centers around these tariffs, following Trump’s announced plans to impose blanket tariffs of 10% to 20% on all imports. According to Trump, these tariffs will be paid by the countries targeted by the policy.

“I am today announcing that I will create the EXTERNAL REVENUE SERVICE to collect our Tariffs, Duties, and all Revenue that come from foreign sources. We will begin charging those that make money off of us with Trade, and they will start paying, FINALLY, their fair share. January 20, 2025 will be the birth day of the External Revenue Service”.

In reality of course, there is not much external about the revenue generated by tariffs as these additional costs will fall on the importer, that is, American households and businesses. While tariffs will also hurt foreign producers by making their product less cost effective for American consumers, they are ultimately a tax on import, hence a tax on American buyers.

Considering that President Trump has access to some of the world’s top economists, it is clear that such claims are not made out of ignorance. Instead, they appear to be crafted to exploit the lack of understanding among his supporters, obscuring the true economic burden of these policies.

In addition to burdening American consumers and reducing household disposable income, the expected retaliatory tariffs from U.S. trade partners will target key U.S. industries, further impacting Americans' earnings. Regardless of how strategic Trump and his supporters consider this approach, it’s difficult to identify any true winners.

Like many other countries, Canada is bracing for the impact of U.S. tariffs on its economy. Given that President Trump renegotiated the North American Free Trade Agreement (NAFTA) during his first term to be more “balanced”, some may have expected that Canada will be spared this time around from tariff talks. But the incoming president has vowed to punish Canada with 25% tariffs, initially citing weak border security, although daring to have a trade deficit with the U.S. likely has a lot to do with it.

As Canadian officials plan retaliatory tariffs, Canadians should expect to bear the cost. With many households still grappling with elevated prices following the pandemic, additional price increases driven by a trade dispute would further add to the strain on Canadian households.

When discussing tariffs, it is important to be clear about the goal as well as the consequence. If the U.S. aims to bring back manufacturing jobs by making foreign goods more expensive, it is doubtful how successful it will be. With the cost of production in the U.S. being so high due in large part to higher wages for American workers, any shift in manufacturing back to the U.S. will be mostly automated. While American households will broadly bear the cost of tariffs, the wins of this strategy will accrue to the top of the income distribution.

Safeguarding the health and lives of citizens is an economic objective in addition to being a social and health objective, as these individuals make up the workforce. Coronavirus has posed a threat to economic wellbeing through its threat to the lives of workers which necessitated a lockdown around cities in the world, and the impact of that on businesses. The virus has put a damper on global supply chains as a result of its effect on global demand and has led to businesses shutting their doors or downsizing, causing a large number of people to lose their jobs permanently. The goal for governments is to limit the job loss as much as possible, allow the continuation of economic activity to the greatest extent possible while keeping workers safe, and to ensure that the economy can have a quicker recovery post-COVID by keeping the ties between employers and their employees and reducing the number of bankruptcies to the barest minimum.

What about individual liberties?

The issue of individual freedom is not irrelevant. It is known to be a fact that governments expand during crises, and some of the liberties taken in the name of protecting citizens may continue well after the threat to lives has passed. Even at that, public health takes priority and the expectation is for citizens to be willing to give up some of their freedoms temporarily, to an extent. A lockdown produces serious issues other than loss of income that cannot be downplayed such as the rise in domestic violence cases that has been reported across the globe, or the threat to mental health, and considerations should be given to these.

The allowance given to governments certainly depend on where in the world the people are located and the freedoms they already enjoy. Hong Kong was able to use apps installed on the phones of citizens to record where they are and to enforce quarantine, and South Korea was able to use security cameras and credit card transactions for contact tracing, measures which will not be accepted in most of the developed western world. It is far easier for those governments to impose a lockdown and fine those who flout the rules, and to rely on personal reporting for contact tracing, but even these less draconian measures have received some push back.

Policy Considerations

The trade-offs the pandemic has introduced is something that we see countries around the world grappling with or struggling to grapple with based on their policy responses to COVID-19. On the one hand we have social distancing and lockdown rules, social policies which have led to lives saved. On the other hand, we have lost jobs and income, and increased unemployment. Evaluating the trade-off requires us to answer the question, what is the value of a human life? Or better yet, what is the value of each saved life?

Completely avoiding trade-offs implies that we find policy that maintains physical distancing and/or mandatory lockdown to limit the spread of the virus, while allowing economic activity to continue undisturbed. This would be possible if all economic activity could persist within social distancing rules, which we know is not the case. All we can hope for is to minimize trade-offs.  Although trade-offs exist between health policy and economic policy, there is also a level of complementarity between health and economic objectives. During a pandemic, protecting the health and lives of citizens is also an economic policy, as there is no wealth without health.

The objective of policy during the coronavirus pandemic is to minimize the number of lives lost, while also minimizing the economic contraction to as large an extent as possible. We also have to ensure that the actions taken in the short run reduce the length of time it takes for the economy to recover which also has economic and social repercussions. Because our actions rather than some invisible force or mere chance play a huge role in the number of deaths that will occur, the primary goal of government is to try to prevent as many deaths as possible.

Is there a role for government?

The most critical objective is to protect the health of citizens by limiting the spread of the virus. No other institution can be trusted to take up this mantle as some individual freedoms have to be given up temporarily to such institution. Government is also required to provide information, guidance, and leadership and to coordinate efforts to keep the society and economy churning in these uncertain times.

Data from Canada as well as other countries revealed that individuals living in overcrowded communities, low income communities, and communities with higher health disparities, most of these occurring to the same group, are more susceptible to COVID-19. Helping lower income earners and the most vulnerable members of our society is a social mandate of government.

If the market were left to its devices and governments did not intervene, individuals and businesses would not take the necessary precaution to prevent the spread of the virus, because those precautions would be at least economically costly to them, and at most both economically and socially costly in the case of individuals. The effect of not isolating on the health of third party will be completely discounted by people who are infected but physically well enough to remain in the workforce to support their family. This situation produces a market failure where the rational decision of individuals leads to a suboptimal outcome for the population. The chaos that would ensue could cause longer lasting damage. Government has a role to play in stabilizing the economy after the mandated closures have taken place by providing income to those who are affected by COVID-19 and those who have lost their jobs, and by providing support to businesses to prevent further job losses. The only other option would be to wait for the market to correct itself, which will inevitably lead to a more damaging recession, and a longer and more painful economic recovery.

In addition to this consideration, a determinant of whether or not there is a role for government is how policy to improve social and economic outcomes will be funded. Although this is less of a deterrent to government action in the face of a pandemic, the government of Canada for one has very low borrowing cost and can afford to take on debt for the benefit of its citizens. As a result of the fact that recessions have ripple effect, it bears to mention that future generations will benefit from decisive action taken by government at a time like this albeit indirectly. The prevention of industries from being crippled, action that leads to a shorter recovery time, the securing of their parents’ jobs, directly affects the standard of living of future generations. With this consideration it stands to reason that at least some of the programs that government is spending on will produce benefits that will be reaped by future generations, so it is not immoral to ask that they bear some of the costs.

Can the government make a positive difference?

Given the scale of the pandemic and the costs and support to private individuals and businesses required to get through it, government is in fact the institution capable of having the greatest impact. Government is also the only institution that would ever have the authority of citizens to put the country on lockdown, a necessary precaution to prevent the spread of the virus, as well as the institution best equipped to prevent loss of jobs. A positive difference is only possible with responsible governments that are subject to checks and balances.

The most critical requirement for government to make a positive difference is good leadership. This is the factor that differentiates countries that are recovering well from those that are not. Good examples of leadership specifically with respect to COVID-19 response are Denmark, Canada, New Zealand, China just to name a few. Government must clearly and effectively communicate its plans and intended action to the public with a degree of decisiveness even in these uncertain times. That entails both making it clear what its priorities are, and how it intends to go about achieving its goals. It also entails giving businesses an idea of when reopening will begin so that businesses, particularly small businesses which typically have less reserves to weather storms are not stuck in limbo which would result in a higher number of bankruptcies.

Given that there are a lot of unknowns, government must engage in continuous and rigorous data analysis so as to continue to broaden knowledge on the effect of the coronavirus 2019 on health as well as to determine which individuals and industries are most affected in order to create targeted policy. This would also be done to evaluate the effectiveness of policy actions.

Moreover, for government to be able to do a good job, it must be highly trusted by citizens. This is absolutely critical for government action to be accepted by citizens and for citizens to be more willing to cooperate with government plans that may temporarily encroach on individual freedom. 66% of Canadians -versus 57% of G7 citizens- somewhat or strongly approve of government’s COVID-19 response.

Another consideration is that plans of the government must be less concerned with politics, and more concerned with getting the country through the crisis. A situation such as that in the United States where politicians and leaders were seen to doubt the reality of the virus will thwart any effort to get people to cooperate with government actions. All governments must act in harmony even if they take actions specifically suited to their own state or province while prioritizing the health of citizens.

Optimal policy design

Government fixes the market failure introduced by COVID-19 by imposing restrictions that prevent the spread of the virus, going from a complete lockdown at the height of the pandemic to a partial lockdown. Government also has to increase spending to provide support to businesses and individuals which would help minimize the effect of the lockdown and prevent the excessive saving built up during the pandemic from causing the economy to shrink since businesses are not investing because of high uncertainty.

With respect to health, government must rapidly improve testing capacity, contact tracing, technological upgrades that allow virtual doctor appointments and increase spending on R&D and provide necessary support to private sector to ensure that developing a vaccine is not hindered by lack of access to funds. Government also has to coordinate with universities and private sector to develop a vaccine for greater efficiency and gear up the use of data analytics to advance knowledge of the virus’s effect. In order to continue to have access to personal protective equipment, government should provide necessary support to businesses that are able and willing to manufacture masks, sanitizers and other equipment domestically to remove any hindrance to doing so.

The free press has a significant role to play in ensuring that government makes a positive difference, by providing subject matter experts a platform to critically assess proposed policies and calling the government to account when it appears that a performative nonsensical policy is being suggested.

The goal of policy is safeguarding the health of workers while also safeguarding their income. We balance these goals out by ensuring that first and foremost, lives are safeguarded and thereafter develop a safe way for the economic activity to continue. We know that seniors are most susceptible to the virus because they are more likely to have compromised immune systems. We also know by now that people of all ages with compromised immune systems are at more risk. Knowing what we know about who is most susceptible to the virus, we take all precautions to ensure their safety.

An optimal design is one that prioritizes a complete lockdown at the start of the pandemic, allowing only essential businesses to work while supporting other businesses to continue operating virtually, possibly by removing or suspending taxes on capital equipment such as computers. Once we begin to see a drop in the number of cases, we should allow businesses which are unable to operate remotely such as restaurants, recreational clubs, to open partially possibly alternating employee schedules so that less than 50% of the workforce goes into work. Those who are at work will be required to wear personal protective equipment and be required to take all other necessary precautions. Customers would also have to practice physical distancing. Businesses that operate effectively remotely should be encouraged to remain virtual.

Having to stay home with kids may prevent some parents from returning to work, this hindrance will be even harder felt by low-income and single parent households. A potential design is to reopen K-12 and make attendance voluntary. Class sizes should be reduced, and physical distancing should continue to be practiced in schools. Kids should be placed in cohorts and allowed to interact closely only within their groups. The voluntary nature of school allows children who COVID-19 poses a higher risk to, to continue to learn virtually. This would also allow individuals to weigh their options themselves and also allow people most in need of and most unable to get costly childcare, e.g. single parents and low-income homes the ability to go back to work even if on a part time basis.

Seniors will continue to be under eased lockdown and interaction with the population should be limited. Since seniors are not part of the working population, a longer length of lockdown poses no threat to the economy and will go a long way to save many lives.

Prioritizing return to work as soon as it is possible minimizes the trade-offs between social and economic policy.

In all of this it is paramount that government maintains flexibility in its policy actions given the uncertainty. Government must remain ready to initiate a subsequent lockdown if necessary. Governments at all levels must cooperate and work together in the implementation of restrictions and lockdowns. The federal government takes the lead while allowing the provincial governments the freedom to determine when and how to ease reopening. With a population like that of Canada where most people are on the same page with regards to the prioritization of safety and de-prioritization of individual freedoms, it is easier for this to be the case. In countries such as the US, it appears that politicization of the pandemic is at a high rate and the ineffectiveness of policy is compounded by the lack of cohesive action by the different states and the federal government.

A blueprint for repayment of funds should already be in progress at the point where we have a clearer idea of how much debt the government will incur on COVID-19 response spending. We would need to come up with avenues of raising funds giving thought to who those funds serve.

The obvious first choice is the good old savings account. Savings accounts at least in Canada earn a reasonable amount of interest. This is my go to when liquidity is an absolute necessity. Unlike fixed term deposits you can take your money out as it pleases you without being penalized. Deposits are also protected to the tune of $100,000 so you can rest easy.

Term deposits is the next best way to keep your money (relatively) liquid and earn interests if you are unwilling to take on any risk. It’ll also encourage you to save because you will be penalized for early withdrawal. The upside is that you earn more interest than you do on your savings account.

Guaranteed Investment Certificate (Canadian)– This is probably going to be called something different depending on where you live (if at all you have something similar). GICs are very safe investments that pay a fixed rate of return over a period of time. You don’t run the risk of losing your capital and will most certainly receive the promised payments. GICs generally pay higher rates than savings accounts depending on the type and term.

Government bonds are the least risky type of fixed income security out there. But of course they pay little interest so you have to be careful to compare the rate you receive to the inflation so you don’t end up losing purchasing power. 

Corporate bonds are a much better alternative to government bonds as they pay much higher interest rates. Of course they are less safe than government bonds so you have to do your homework and pick bonds rated BB and above. You can go further than that if you’re even slightly financially savvy by carrying out some investigation about the company’s recent (and maybe even historical) performance.

Open-end (mutual) funds allow you to invest at anytime, and add more to your initial investment as it suits you over time. Closed-end funds only allow the initial investment and penalize you for early redemption (if at all you are allowed to redeem early) so we can ignore closed-end funds. Mutual funds invest in a portfolio of varying types of financial assets using contributed capital from many investors, and are highly diversified. For those who would like to invest in a portfolio of stocks but have no time to carry out the necessary investigation necessary to figure out what shares to include, or for those who don’t have the financial savvy to do that, mutual funds are an easy alternative. Another upside is that the performance of the underlying stocks is monitored by professionals. Mutual funds can be actively or passively managed, and it would behoove you to find out how the portfolios that individual has previously managed performed. Of course mutual funds charge a management fee.

Index mutual funds track the performance of a market index such as the S&P 500. Investing in this ensures that you make a return close to the market return. Some index mutual funds might require you to pay a redemption fee for early redemption, and you have to take note of any front or back end loads (commissions).

One of the most important determinants of asset allocation is the client’s AGE. Age is generally bracketed into four different groups based loosely on how much risk the people in the groupings should be taking. Younger people have more time to recoup their loses and so will be able to take more risk than older people whose sole aim is to have a steady income in retirement. The first group includes recent graduates- they are earning little compared to what they will be earning in the future and are at the stage of planning to have a family. These people would be able to take on more risk and so the bulk of their portfolio will be equities- all other things being ignored. The second age group are middle aged professionals- mostly in their thirties and forties with children. The third group are people who have reached the peak of the career- and earnings-, and the last group are those in retirement age. Based on where individuals fall in this grouping, portfolio managers will decide on the class of assets that will best suit their clients’ respective situations, and the weightings of these assets. Typically, and as an example of how this works, the portfolio of people in retirement will be weighted more heavily towards fixed income securities than that of new graduates.

Risk tolerance is arguably the most important factor after age. Although it is important to know how much risk a person CAN take, the amount of risk they are WILLING TO take is just as important. Risk tolerance obviously varies among individuals, and it has its roots in the psychology of each person. One interesting factor related to risk tolerance is the source of the funds to be invested. People are willing to take more risk on money they inherited or won for instance than on money they worked for- the result of a psychological phenomenon that results in the thinking that not all cash is equal.

Although it is usually the case that people are investing towards retirement, portfolio managers and financial advisors would have to find out what the individual is investing for- their investment goal. It is possible that a person is investing for the purpose of buying a house or car for instance, or saving for their children’s college tuition. Knowing this will also help the portfolio manager determine the adequate time horizon of investments so that he can ease up on the amount of risk being taken as the time for withdrawal of funds approaches.

Tax is an important source of cash outflow for investors, so the client’s tax bracket, and whether people hold their portfolio in a tax deferred account are of great importance. Retirement accounts such as the RRSP (Canada) and 401k (U.S) for example are tax deferred accounts and returns and income earned on portfolios held within these retirement accounts will only be taxed upon withdrawal.

Finally, an individual’s investment knowledge determines how much risk will be taken on their investment portfolio. It is important that the client understands the upsides and downsides of investing in certain assets, and knowing that the client understands this makes it easier for the portfolio manager to take the client’s financial asset recommendations into account.

Apart from the management and incentive fees, investors also have to pay loads (both back and front in some cases) and bear the cost of the frequent trading which as it turns out is very expensive. It is hardly the case that investors actually know how much they are coughing up in all kinds of fees as the fees are usually split up. A necessary step to protect investors will be for regulatory bodies to necessitate providing an accurate picture of how much investors will be paying in fees by aggregating the costs. One dollar here, fifty cents there soon adds up to $100 and then $1,000.

Studies show that returns are really a game of chance. To summarize it very inadequately, a popular study in the field of finance by De Bondt and Thaler (1985) showed how portfolios that had excess returns over a 36 month period (termed “winners”) tended to lose in the next 36 month period and those termed losers tended to win in the next 36 month period making it a zero sum game. The study points to the fact that due to wide availability of information, it is difficult and close to impossible to beat the market. The outperformance many managers boast of is mostly as a result of chance and will tend to be inconsistent. But even when fund managers do beat the market, the cost of trading renders their big win moot. Studies about reversion to the mean also show how individual stocks cannot consistently outperform their fundamentals. Picking winning stocks is just as chancy as picking a truly skilled portfolio manager. Keep that in mind before you decide to entrust your life savings to one.

Don’t talk about it, DO IT.

Did you know that talking about your goals and future ambitions makes you less likely to achieve them? You can hear more about that in this 3 minute ted talk by Derek Sivers. Sharing your plans to achieve with people tricks your mind into thinking that you have achieved or are close to achieving without having necessarily taken any steps. I happen to be one of those people that likes to rave about my plans for the future with the people around me, and I do it because I found that it makes me accountable to them. I tell friends and sometimes even clients and the next time they see me they’re asking me how far I’ve gone. What I realized however is that most of the time my answer is that I haven’t started, the satisfaction of painting the future has left me immobilized and unwilling to do the work. I still share my plans with those whose opinions I value so that they hold me accountable, but not before making significant strides.

Everyone you meet is a potential contact

Someone told me this a few years ago and I believed it, but I went on to interact with people and I just didn’t see how some people could be of any use to me professionally. I was wrong. Your colleagues, your clients, your managers, the cashier at the grocery store, every one of these people is a potential contact. I tended to think of their personal situation (i.e their current career) and assumed that they could be of no help to me. What you don’t know about people until you get into random conversations with them however is what they know and maybe even more importantly, who they know.

Embrace Your Rejections

I stopped trying for something I had wanted badly for so long around mid-2016 and began to feel paralyzing emptiness. I had heard too many No’s and was simply FED UP. In response to the emptiness I felt I decided it was better to at least keep trying. Every “No” is an indication of continued effort, I was almost there. Soon enough I started to feel an unusual kind of empowerment from the rejections I got. I took every new “No” as feedback that I needed improvement (I asked for feedback when it was possible) and went back every time to see what I could improve on for the next presentation to the next person whose answer might be a yes. Know this. For every “No” that you get from future employers/clients/love interests, you are one step closer to a “Yes” as long as you receive each no, not as an attack on your person, but as an encouragement to try harder. Sometimes things simply don’t work out for you, and that is fine too. Whatever is for you can never pass you by if you’re working hard towards it. If it passes you by then it simply wasn’t your path. Find out what is.

Learn to ignore those that tell you to “Relax. (because) You’re still young. (and also) You still have time”

I don’t want to relax, and that is okay. Telling me to relax is like telling me to go eat (my own food) because I must be hungry. If I’m hungry I will eat, the same way I will relax when I get tired. It’s not advice I want or need because try as I may (or you may), I can never outdo my body and mind. Being someone who actively seeks advice (meaning that I have a large enough sample size to make the following observation) people fuelled by passion to achieve and those empowered by constantly being on their grind never advice you to relax. They advice you to change strategies or course but never to relax. It is those that I see to be slowing down that give me such advice.

Disregard the “I can’t, therefore you can’t”s of the world

It’s simple. When people cannot picture themselves being committed the way that you are to achieving a goal, they tell you it’s not possible or that you can’t do it. I don’t consider myself a genius but I was taken aback when I told someone I intended to graduate with no more than 5 B’s and all A’s and they said it was impossible, I did it. I was unimpressed when someone said most people have to fail the CFA level I the first time and I should prepare for that, I passed it. Don’t let people’s personal shortcomings define your future.

Certain events have led to the build up of this strong emotion, but one that comes to mind and is freshest in most of our memories is the 2008 financial crisis. Since that time there have been uprisings such as the occupy wall street movement, and most recently the black lives matter movement- yes, that too albeit convoluted is tied to people airing out their grievances over what they perceive to be unfair economic situation.

The U.S federal authorities unleashed a demon when they decided to bail out the distressed banks unknown to any one at the time. People who hitherto had no idea how things work in the corporate world became aware of “golden parachutes”. People immediately seemed to start to pay attention to the fact that the guys at the bottom do a significant portion of the heavy lifting but when the corporation is in trouble, those good guys are sent away with little to no severance package while those responsible for the bad business decision get a cushy landing.

More recently during the U.S presidential election Donald Trump got on the world stage and escalated the issue of the jobs lost to american companies’ prosperity agenda (I have phrased it a lot more sensibly). In a bid to make more profit, which undoubtedly makes economic sense, American companies have relocated to countries with cheaper labour allowing them to both price their goods down competitively and to increase their profit margin. This has of course left a lot of rural Americans who had hitherto worked in manufacturing having to learn new skills and extremely unimpressed with the country they pledge allegiance to.

Both Sanders and Trump knowing where it hurt Americans the most also used their stage to point out how american companies take advantage of tax shelters and end up paying little to nothing in taxes while the American middle and low income earners carry the weight of the tax burden.

People like Ronald Reich, Joe Stiglitz and other advocates for equality made us aware of all that happened at the height of the 2007-2009 event in books and documentaries. Reich made a compelling documentary he and his cohorts cleverly titled “Inequality for all”calling attention to the fact that although the recovery is in effect, working class wages keep declining and have been on the decline even before the financial crisis. Every one at the time was going through terrible times, people lost their homes and livelihoods, and as far as the American eye could see the only people who got help were the stinky rich. What most Americans don’t seem to realize- mostly because they think everything begins and ends with them- is that emerging Europe and Africa are still recovering from a catastrophe that is a result of their carelessness.

Now that the picture is fairly painted I guess I should say, OF COURSE PEOPLE ARE ANGRY.

Viewing monthly income as disposable income…

isn’t that how people get stuck living paycheck to paycheck? This a huge issue that stems from not having received financial education growing up or simply wanting to keep up with the Joneses. I keep telling people, your monthly income is not, and should not be seen as the amount available to spend monthly. This is one of the reasons why I advocate automated savings. A small portion of your income should automatically be designated to savings. Whatever is left is what you have to scale your total monthly expenses to. Let’s attach numbers to it to give a little more perspective. Say you earn 40k a month, your income after taxes is around 34k ignoring any deductibles you may have at your disposal. If you save 10% of your monthly income after tax and plan to spend the rest on expenses but are unable to on most months, you are most likely living above your means. Budgeting comes in handy here.

Not providing children with basic financial education…

isn’t that what produces adults who make terrible financial decisions as they become more financially independent? Financial blunders that start at young adulthood (after high school) are very difficult to correct as they become ingrained as behaviour. The deeper into a hole you’ve dug yourself, the harder it is to get out of it. Growing up my dad always emphasized  the importance of saving which always seemed funny to me since he gave us all the money we had (pocket money) and basically expected us to save his money for ourselves. He gave us lunch money to school everyday but expected us to be smart enough to not spend it all because he knew, and we knew we really didn’t have to. He encouraged us by giving the occasional shout-out to that sibling that saved  a lot in the month, buying us piggy banks and then eventually opening us up savings accounts to put our piggy bank fortunes in. During a conversation with a colleague recently she told me that her mother had lived pay check to pay check so she didn’t imagine it any other way. The aim for her -before becoming more informed- was spending all of her income and making sure her income went around all she thought she needed for the month. The most basic importance of savings is having something to fall back on in times of emergency and the importance of that itself cannot be over emphasized.

Viewing credit card as free money…

but is it though? For most financial institutions in Canada the typical interest rate on a credit card is 19%. Consider that you spend $1000 on your first credit card which has an APR of 19% and make a payment of $25 (that is the minimum monthly payment of $10 plus some), it will take you 64 months to pay off your credit card assuming you don’t spend any more on the card and just dedicate your effort towards paying that first $1000 you have spent. That is 24 more months than it would have taken if you were not paying interest, 2 whole years of paying off interest that would come to $596 at the end of the 64 months thanks to Compound Interest. If that sounds free to you then I guess you can keep piling up your credit card debt. I always advice people to put their expenses on their credit card in order to take the most advantage of their credit card points and rewards BUT to make sure to pay it off bi-weekly unfailingly. You must pay off your credit card balance at the end of your statement period if you would not pay it off bi-weekly (which spares you interest payments completely). The last thing you want to do is to pay $4000+ to absolve credit card debt of $2000 because of compounding interest payments. Your monthly credit card spending should never be higher than your checking account balance assuming you have a separate account holding your savings. This is another scenario where automated payments come in handy since the funds will come out of your account whether you like it or not.

That December overdraft…

is it really necessary? On the last month of the year banks see a greater number of people coming into to see if they could possibly increase their overdraft and credit card limits. This might sound silly to those that observe the tradition of gift giving (including giving to oneself) during the christmas season regardless of financial situation but really, don’t give if you cannot afford to. The worst way to start the new year is by taking on consumption debt, that is debt that doesn’t reap any financial benefits. I recognize that there is more to life than money, but make the gifts by hand, thrift, do whatever you can to avoid spending ridiculously or going into more debt towards the end of the year in preparation for the new year.

Failure to plan family size according to earnings…

is that cloth you have cut really your size? One of the biggest problems for families living from pay check to pay check is that there are more children than there is money to go around. Kids cost a lot and there needs to be more planning going into having them than just having that inclination or gut feeling of being ready. With the younger generation being a lot less eager to procreate and with most women preferring to participate in the work force, this is becoming less and less of a problem but it nonetheless is still a problem, especially among working-class families.

The list doesn’t end here but I better stop before I end up writing a book. I hope this helps!

Let’s talk about bills baby…

We can’t stand them, and we cannot live without them. Or can we? A large portion of bills these days are those resulting from wants rather than needs. I have met people who decide to compromise on the needs and direct their funds towards the wants, to each his own. A reasonable person should not have bills greater than 40-45% of their monthly income, and this number is based on a formula that has worked for me. If you decide to choose your wants over your needs that is your cup of tea, but challenge yourself to spend less than 45% of your income on bills (and this is including rent or mortgage). This also forces you to prioritize and cut costs where possible, for instance by downgrading your phone plan, taking the time to shop around for car insurance coverage, etc.

Don’t even think about keeping up with the Joneses!

Unfortunately, you have to live according to your income. The mandate here is not just to live within your means but to live below your means. The best advice I can give is that you set up automatic transfers from your chequing account to your savings and/or investment accounts set to occur on the day your pay comes in. No matter how low your income is you must learn to live like you earn just a portion of it, say 85% for those of us still struggling to climb up that steep economic ladder. It is normal for economic agents, that is you and I, to want to satisfy the present self first as we find it difficult to think about our future self, we all like good things and we want them now. But there is absolutely no reason for you to spend all your income on monthly expenses and food. While in uni I myself fell a victim to wanting to live larger than I should have, so that by the time I was done paying rent for my fancy 1 bedroom apartment in the choice neighbourhood it was located, and paying my phone, internet and hydro bill, and going grocery shopping, all I was left with was a meagre sum for those unavoidable unexpected expenses. I was completely wiped by the end of the month. That is no way to live, believe me.

The occasional splurge

Yes it is allowed. I personally would be incredibly miserable if after all my hard work making and saving money, I don’t get to enjoy any part of it. First thing to remember is, the occasional splurge should not be a greater percentage of your income than what you save on a monthly basis. Second thing is the occasional splurge must be occasional. Once every month you can treat yourself to dinner at a fancy restaurant, a few times a month you can take yourself out to the movies. The frequency should be scaled to the cost, all the while making sure that you don’t spend more than 10% of your income. Consider saving separately for the more expensive splurges that occur less frequently (the occasional shopping trip, spa day, trip abroad). I usually advice people to have more than one savings account, making sure that the regular (15%) savings isn’t affected by the other expenses they are saving for. These treats are a healthy way for you to relax and break away from the cumbersome repetitive schedule that becomes life. All work and no play makes Jack a dull and miserable boy.

Never stop looking for ways to earn more

Hey guys, ever heard of side hustle? A side hustle to me is a necessity and there are so many ways to get a paying side hustle. I must tell you though, in my own experience a side hustle doesn’t necessarily need to generate money in the present. I have taken on so many side hustles in the past that I did not get paid for, and that was for the sake of gaining expertise or experience in a field I thought I had potential in. However the side hustles, both paid and unpaid that I have undertaken in the past all paid out eventually in more ways than one. Enrolling in the CPA program as an accounting major believe it or not is a side hustle, so is taking a makeup class in order to eventually work as a make up artist.You always have to be looking for ways to increase your future earnings, and it’s not just as an economic stepping stone, but to grow your career so can you can be more fulfilled in your endeavours.

Have you been doing the math? I advised you to save 15%, allocate 45% to bills, allocate 15% to the occasional splurge (plus other necessary expenses like personal care). What’s left would go to necessary and unplanned expenses, and of course groceries. Personally, I always have more money left over which I eventually move into my savings account. My income is not so high and yet I live very comfortably, do you?

Quick anecdote. Someone I know who is of African descent got a job recently and told me about it. A week later he contacted me saying two other black people have been added to the workplace. This is in a city with the majority of its population white and asian.

My first thought was, did they think no one would notice that these people are most probably “diversity hires”? And I know what you might be thinking, I considered it too. There is nothing wrong with adding people to the workplace because there aren’t other people who look like them. The problem with this situation however is myriad and I would quickly touch on two. The first is that no one feels good being hired just because of a physical characteristic. You might be thinking “well at least you have a job”, but if these new hires are in any way like me, they want to EARN every single opportunity they’re given. It doesn’t feel good to the employee.

The other issue is employment that is far from being based on merit. My big issue with this is that it leads to what psychologist term a self-fulfilling prophecy. When you as a manager decide that your workplace is missing a particular racial group, it is incumbent on you to try to find competent people of said group to join your organization. The keyword here is competent. Some racial groups unfortunately are immediately prejudged as incompetent before they even have the chance to prove their worth. When employers go on a hiring spree of specific racial groups chances are that they’re throwing an important factor out of the window- competency. They bring in new people mainly because they’re the right race and end up with non-performers, leading them to confirm their previously held biases- that people from those racial groups are in fact incompetent.

The importance of inclusion cannot be overemphasized. You want employees that mirror customers/clients both in terms of physical and cultural attributes, and that translates into more profit for the company since customers/clients are more comfortable and can be served by someone who understands them more- especially in the case of language barrier. Sacrificing competency is completely unnecessary. If competent people of a particular race aren’t putting in their application, it might very well be because they have seen your work environment and have been led to believe that you prefer a certain demographic. The onus is on HR to go out of their way to find those people.

What should come to our minds when the subject of inclusion comes up is the fact that diversity necessarily means that people come into the organization with different ideas and perspectives, some of them specific to their cultural upbringing, and this is very beneficial to the company. It is most probably the case that Africans and South Asians for example understand Africans and South Asians respectively better than anyone else. Bringing those perspectives and allowing people share ideas on how to reach demographics they are familiar with is good for productivity and bottom line. So away from the argument of fairness, let’s focus on efficiency.

The middle class is the driver of policies that are most favourable to the general public. With a large middle class there is a push for government to invest in public education, the health care system, physical infrastructure like roads, bridges and airports, and so on. As it is, democracy is in fact a slave to wealth and so policies are largely influenced by private individuals and corporations who can afford to lobby for policies that are beneficial to them. The combatant of this form of unfair law making is a middle class that exists to check the excesses of law making bodies. This is why the outcry to Get Private Money OUT Of Politics. With a large middle class that does its job as the police of policy makers, we have government money going towards building infrastructure- which facilitates production and encourages innovation- that the middle class and the poor benefit from, and that the rich also benefit from should they decide to use it. Without prejudice to any particular group, the wealthy can afford private jets- so there’s little need for government built roads and bridges- private schools, and private healthcare, which is why they tend to find government spending on public goods and on particular projects that they, the 1%, do not necessarily depend on unsatisfactory. This illustrates in a simple instance how majority will be left disenfranchised if the rich have greater power to influence policy than majority.

With their large influence on policies, the middle class will tend to be more inclined to participate in politics as they expect that their voices will not be blurred out by big money. This is of course where trust comes in. Knowing that government will, most of the time, act in favour of majority encourages trust in the institution of government. The policies that the middle class is in favour of are growth spurring- right from the middle and the bottom of the ladder, As opposed to from the top as proponents of Trickle Down economics suggest- and will tend to raise people out of poverty more effectively and probably within a shorter period. When the middle class is the middle of the bell curve- i.e. when they make up majority- studies show that trust increases in the society. Social trust is a growing area of concentration in economics but the main point is that lack of trust is a deterrent to growth. Lack of trust among economic agents introduces something of a transaction cost that slows down the economic machine. With a large middle class people can assume their neighbour down the street has interests similar to theirs, that they are fighting for a common goal, which fosters social connections. There is therefore, less cost taken up in business transactions to make sure that the other person is not cheating (interestingly, this can be tied to Asymmetric information).

There’s a certain level of political polarization that accompanies great inequality. The people on the left are angry at the rich and at government for seeming to favour policies that are beneficial to the rich. On the right however, people are angry at government for spending money that they pay in taxes (being the biggest albeit unwilling contributors) on things they can do without- Public goods-, angry at the poor for spending their money, and angry at immigrants for benefiting from their tax payments. This introduces a society rife with hate which introduces another form of instability. In a more equal society- meaning a society where majority qualify as middle class- the significant majority have aligned interests, economic agents are less frustrated and are more willing to work together.

A nation cannot completely rid itself of inequality, that would require punishing productivity by excessively taxing the rich and giving unfair handouts to the poor. The emphasized importance of a middle class does not mean that the poor and the super rich are irrelevant in the grand scheme of things, but that policies that are geared towards favouring the middle are more beneficial to the general public.

The average consumer is another big winner as oil prices continue to fall. Consumers will get to spend less to fuel their vehicles and power their generators (in less developed countries), which of course translates into higher disposable income that can be allocated to other consumer discretionary products. With lower travelling cost and higher disposable income, it is possible that airports will be a little more crowded this holiday season although the effect of price movements usually take time to materialize and also to show up in data.

The Agricultural sector is one of the world's largest users of oil as that is one of the components of fertilizer. They can also be expected to benefit at this period as their cost base is reduced drastically. Furthermore large manufacturers can be expected to have started stocking up on oil as it is right now to take advantage of historically low prices. This includes both manufacturing companies and governments of manufacturing economies around the world. This sort of accumulation is much easier for governments who would typically have greater ability to store oil.

Since lower oil prices will influence the price of fuel, we can expect food transporters to gain, and expect the lower transportation cost of food to lead to lower food prices as time goes by. The price tag of food in more structured markets will take time to adjust but the immediate effect of lower food transportation cost will be felt instantly in less structured markets.

Lower transportation cost also applies to other goods that have to be transported both internationally and domestically. However, because prices are usually sticky particularly for non-consumer goods, we can expect these prices to hang at their current level for the time being and start to fall over time. The price of oil is expected to be low for a while longer so maybe, just maybe discretionary products will reap the benefits of the price slump.

The oil market is currently in disarray because of falling demand and increasing supply and because of this, our winners might continue to win well into 2020.

At the risk of sounding like a paranoid cynic, government is typically made up of people with private interest that intend to exploit their position of power for private gains- physical or otherwise. Because of the selfishness of their interest and the temporariness of their tenures, government typically takes unfortunate policy steps that might be of great disadvantage to its people. The thing about these so called unfortunate policies is that they are made to appeal to people, and people hardly ever see the looming danger or are too consumed by the present benefits to give the unavoidable future consequences much thought (a concept psychologist refer to as the Present Bias). One can find a presidential aspirant planning to cut taxes for instance to appeal to the electorates when the country appears to be taking on more debt. Government is incredibly shortsighted and most leaders mostly care about the 4/5 or 8/10 years during which they are in office and this can prove a great hindrance to effective policymaking. There is also the amount of influence the private sector has over policy makers. In the U.S for example, large corporations appear to have government wrapped around their fingers and so many weren't too shocked when government at the time decided to spend public funds inefficiently by bailing out banks that took excessive risk, creating the problem of moral hazard, all while running a large deficit.

Fiscal policy is difficult to implement as it takes convincing the relevant policy making body (congress/assembly/parliament) about the appropriateness of the policy. There is also the process of first having to formulate the intended policy and putting it through various tests to ensure its soundness before presenting it for approval. After convincing other law makers, certain steps then have to be taken, all ordered, in preparation for the implementation. Before policy makers actually get to the bringing to life of their policy plans, time has passed and the economic turmoil might already be abating although there might be no indication of this at the time.

Most people including myself prefer monetary policy since we can argue for Central Bank independence. Monetary policies also take almost no time to implement compared to fiscal policy. Apart from that, it is more difficult for the Central Bank governor to use his/her position to further private interest when he/she has a board (made up of a practical number of people-unlike with fiscal policymakers) to consult with on all policy issues. Independent Central Banks are also arguably more warded off from special interest groups

Politics simply has no place in dictating macro policies.

Inflation results when there is too much money chasing too few goods. During periods of economic growth, rates are low, borrowing is rampant, investment is booming and businesses are growing. With all of that comes more hiring (less unemployment) and increased wages. Also, during this period banks are excited to lend to private consumers, money is cheap. This results in the saturation of the economy with money and debt. What people don't realize about inflation fuelled by economic growth is that the excess liquidity is largely made up of debt in addition to cash. This is obviously a problem and as soon as some agents recognize the current economic situation, they start selling off assets that they estimate to be overvalued. This realization and correction affects both the securities market and the real asset market and it happens at the peak of growth and precipitates the stage that follows, the burst. There might be no danger of hyperinflation in well managed economies because inflation in this case is as a result of economic growth and not the careless printing of money.

As was alluded to previously, during periods of excess growth, economic agents are highly leveraged. At the realization that assets are overpriced people cannot afford to pay back their loans anymore because the value of the debt is much greater than the actual value of their asset so they would choose to forfeit. This is what leads to the bank failures that occur during contractions. The widespread default that characterizes this stage is also caused by companies laying off workers, cutting pays, and reducing hours as production slows. Just like magic the money that once existed vanishes into thin air.

The difficulty with excess growth is that for the momentum to continue and to keep the economic machine running at its current speed, more and more of private savings will be needed to fund growth. That means that as the boom continues, an increasingly larger portion of income (savings) will be needed to fund growth. At a certain point savings falls short of the level needed to keep growth going and the economy grinds to a halt

Environmental damage is one of the most disturbing results of excess growth. Think of the economy as an industrial machine. Excess growth is analogous to said machine working over time and dispelling more waste as it works over capacity. This could be actual industrial waste or waste from having more vehicles on the roads as more people have access to loans and can afford to acquire them for example. Either way, this will result in more pressure on the environment than carbon pricing and waste control methods will be able to curb.