I'm curious about everyone's take on inflation in Canada over the next several years. I confess it's partly because I'm considering mortgage options right now, in addition to being an investor in precious metals.

According to Statistics Canada, the increase in M1 for 2007-2008 was 8%, the increase in M2 was 9%, and M3 was 12%. http://www40.statcan.gc.ca/l01/cst01...

The government has so far promised to engage in stimulus spending to the tune of 20 billion. http://www.actionplan.gc.ca/eng/feat...

The government is also likely to face dwindling revenues from a smaller taxation base, and I've heard a 2009 deficit of 40 billion bandied about in the media if there are no cutbacks.

It does seem inflationary, even puzzlingly so, because I am not aware of a need to print more money in Canada in the last three years. Perhaps the government was trying to maintain a low valuation peg to the U.S. dollar. Perhaps it was just making the deficit seem better by printing money instead of saving it. But it is nowhere near as inflationary as the U.S. M3 figure of 16% and recent M1 figure of 17% And who knows what it will be by year end.

http://www.shadowstats.com/alternate...

My take:

I don't think Canada will experience extreme hyperinflation. I think we will experience 8-9% inflation rates, starting about two years out. Not nice, but not as bad as what the U.S. will encounter. I just don't see the impetus for inflation short term here.

I am a bit surprised, though, that the Canadian Government is going very firmly down the inflationary road, and was doing so before this crisis. Isn't a 1-2% monetary growth rate supposed to be a better target?