Canada’s Economy Is Rigged: Asset Owners Win, Workers Lose

Welcome to another episode of Inside Canadian Real Estate, guys. Today I'm doing a solo episode. It's just me. Because I think there's something very important that I need to talk about that is affecting pretty well all Canadians. And I think we're at a point right now in the economy where the majority of Canadians are struggling. I think it's very safe to say that based on the numbers, the majority of Canadian households, the majority, greater than 50% are definitely struggling through this economy, these crazy economic conditions.

They're not making enough money. The bills are getting higher and higher. Their mortgage is getting higher and higher. And they have no real levers of action. Like they don't have anything they can pull to change that trajectory. Your job is paying you what it's paying you, but the groceries get more expensive.

The gas gets more expensive the housing costs get more expensive, everything, like from your gas bills, your hydro, it's all off the charts. If you have kids, clothing, right, outings, travel, like try going to the States now with the dollar. It's like literally a 40% premium. Your $10,000 trip is $14,000. It's just, it's out of reach for the majority of people, right? And so what's happening is the question.

What is going on in this economy? Why is it happening? And how do you.. as a Canadian, as an average Canadian, protect yourself. And obviously the answer's gonna be a little bit different for everyone in the sense that depending where you're at in your life, okay, if you're self-employed, a business owner, an investor, substantially wealthier ready, struggling paycheck to paycheck, blue collar, white collar, whatever, the point is depending where you're at, the answer's gonna be different in how you deal with this problem. And I wanted to talk about that because I think there's something very important that every Canadian needs to understand in terms of how to navigate the economy we're in.

And it's a very simple concept and I'm gonna basically lay it out, how you can deal with it, how you can actually leverage this concept to improve your life, your future, the future of your family. And the simple concept is that we are in an asset-based economy right now. Canada is 100% an asset-based economy, not an income-based economy. And that's super important to understand because when you're in an asset-based economy and your primary source of leverage is income, so the majority of your money comes from going to work, making money, and then trying to spend that money, you will always be behind. And I'll tell you why you're always gonna be behind.

You will always be behind because your money is consistently worth less and less and less. Okay, so this is called inflation. So there are various factors, whether it's the government printing money, which they do a lot of, borrowing money, leveraging heavily, like we are as a country, people individually, consumers leveraging heavily, they're using credit cards and credit lines and home equity lines, and all of this basically between the government and the people that live in this country, overspending and over-leveraging that floods the market with money. And so you have a lot more money competing for a basket of goods. The basket of goods being the stuff that you need to buy.

Whether it's clothes for your kids or food or whatever, there's more money, there's more dollars competing, but the majority of those dollars competing are essentially what you'd call fake dollars, they're leveraged dollars. It's money that's been printed or borrowed or given. It's not a fair.. and like equal, I guess you could say competition for the basket of goods. Because if everyone was just spending the money they earned, I make one dollar, I spend one dollar, it's a different scenario. But if you have individuals making one dollar and spending two dollars, it's 100% increase beyond their traditional buying power. And then you have a government that prints money and borrows money, over leverages money.

This creates.. a terrible inflationary environment, okay? And we saw it, and especially in Canada, you see it the most in real estate. It's a very real estate, like, specific issue. Because housing prices in Canada, specifically the cost of ownership and purchasing a home, is incredibly high when you compare it to both individual income and our GDP as a country. So nationally it's very, very high, and individually it's very, very high. And what I mean by that is.. it does not track to incomes at all.

So the United States has in most states the same or significantly higher average income. So the average worker in the United States makes the same or more. And if you actually account for the currency exchange differences, they usually make more in terms of buying power than Canadians do. And yet their housing costs on average are significantly lower. In many places, 50%, 60%, 70% lower. You can go to the States and buy a house for 200 grand.

In many places, including high demand places, you can go to Florida and buy a home for 200 grand. You cannot even buy, I know because I just sold one, you cannot even buy a modular in like a trailer park in a secondary market in Canada, let alone a home detached or freehold or townhouse of any kind. Like you can buy that pretty much anywhere in Florida, let alone all there. Like if you go to a secondary market in a non-high demand state, you can buy a house for nothing. You can buy a house for 150 grand, 120 grand. They exist.

That does not exist in Canada anywhere. And so... How did that happen and how do you manage that? So first we have to talk about how that problem came to be. The housing market in Canada is absolutely absurd because, back to my first concept of the flow of money, the amount of capital that entered the market to compete for that specific basket of goods, which in this case is housing. That is in large part thanks to Canadian mortgages.

And so what happens with mortgages is, It's a very strange thing to be honest and we're moving more and more. It's funny how this is becoming prevalent through the chain of products. It started in housing, then it went into cars and now it's into consumer products. And what I mean by that is financing, the concept of financing in debt. It used to be that you made a certain amount of money. If you had enough money, you'd buy a house with that money and you'd live in it.

And if you wanted a car, you'd make a little more money and you'd take that money and you'd buy a car and you'd drive it. And if you wanted clothes or a new computer or like shoes or whatever it was, you'd make money and you'd go buy that item. But we started to do this thing called financing and in housing we call them mortgages where it's Framed as if they're helping people so the banks are going will give you the majority of your purchase price. You just put a small percentage down and the only programs that have come out by the way in recent years are how to make that down payment smaller and the debt bigger, which just furthers the problem.

But the whole concept of mortgage is the bank will pay you the majority of the cost of a home and we're gonna call it a mortgage, debt, and you're gonna put a small down payment, that's the equity, and then therefore we're gonna make housing more affordable. Wrong, because... What happened is if everyone makes, let's say $70,000 a year, you could only afford, if you were buying a cash home, you could only afford a home that was within a reasonable cash budget. So assuming you make 70 grand a year, if you could save 20% of that even, you know, would be something like $14,000 a year of savings, it would take you like 10 years to save 140 grand, which would basically be, let's say, the price of purchasing a home.

And home prices could not exceed.. that reasonable value, whether they were 70 grand or 80 grand like they used to be back in the day, because people would not be able to afford them, there'd be no mechanism, and so it would cap the price of housing. When banks come in and go, no, no, it's okay, we'll give you 50% of the price, 70% of the price, 80% of the price, 90% of the price, now that bank's money is competing for these residential homes. And so now, most people, let's say they can only afford $100,000 of cash to a home, now they can buy a million dollar home. So now you have a million dollars of capital that can compete for this house that previously you'd only have $100,000 for.

But now everybody has access to that leverage, to that mortgage, to that debt. So if you're tracking me here, basically the banks, by creating mortgages, interjected more capital into the system. They put more money into the system to compete for housing. And that drives the prices up. Because if everyone could only afford 100 grand per house, would cap the price of houses around 100 grand. If everyone can afford 500 and everyone's willing to put out 500, the prices will rise to that.

And if everyone can afford a million, the prices will rise to that. I'm oversimplifying because there's obviously like individual details that affect that. And there's of course luxury properties, high net worth individuals, whatever, that's not what I'm, I'm generally speaking, that's how it works. However much capital can compete for an item caps the price of that item. And that's basically the concept of a free market economy. The free market economy is that, you know, however much capital can compete for something and whatever someone is willing to pay is going to determine the price of that thing.

When you interject more money into a system, people can pay more for stuff. And when they can pay more for stuff, the price goes up because the demand increases. So long story short, mortgages and debt are the reason housing is so expensive in Canada. That's the first order principle of why it's so expensive. When you go down that chain, there are more reasons, there are more constraints, the cost of building, cost of materials cost of construction, labour, carrying costs, financing costs, effects of immigration and over demand. There's a lot of things down the chain, but the preliminary reason why housing gets so expensive in Canada is that you have very few houses and a lot of money.

Canadians really like their mortgages and they really like their big mortgages. 5% down, CMHC back, first time homebuyer, buy a million dollar house for 50 grand. Okay? And now that has rolled down over the years into cars, right? Cars were like two grand, three grand, four grand. Now a base truck is like $100,000.

What's because the financing is so competitive? It's like, no problem, zero interest, you finance the whole thing, you you put five grand down and we'll take care of the rest. Put two grand down, we'll take care of the rest. And so now everyone can buy a hundred, so the price goes up and up and up. And now it's really to consumer goods. You go to buy a laptop, it's like, yeah, the new MacBooks are $4,000, but you can use after pay.

And you could just like pay a hundred bucks today and then we'll charge you every month for the next four years. And so guess what happens? The price of those consumer goods go up and up and up. Pulling this all back, if you're still following me here, I know it's a lot and it's not the most well thought out and organized way to deliver this, but if you're still following me. This creates what I call an asset-based economy. This is my first concept here that we start speaking about, which is the majority of value in Canada is created within assets because of the system I just described.

When you have a lot of access to debt capital, mortgages, financing, all this money is pooling in assets, we've already established the value of those assets goes up and up and up and up. So what happens to the people that own those assets? You own the real estate, businesses, stocks, all of that stuff. Well, those assets go up and up and up. The more debt is created, the more money is borrowed, the more money is interjected into the system. The asset values go up and up and up and up, right?

Where the value of the dollar goes down and down and down and down. And this hurts you if you're an average Canadian that doesn't own assets in a lot of ways. One, it lowers your buying power. So, you're gonna work for your $70,000 a year, and that $70,000 a year buys you $70,000 worth of goods. But then next year, it buys you $60,000 worth, and then $50,000 worth, and then $40,000 worth. That's the whole principle of inflation is your dollar buys you less because the value of everything increases intrinsically, but your currency does not.

The value of currency is going down. And so every year, the money you're working for buys you less stuff. But at the same time, this helps people that own assets because the value of the debt goes down. I know this is a weird concept for lot of people, if you make $70,000 and you hold that $70,000 in your hand, usually in your bank account, but if you wanna hold it in your hand, it will buy you less stuff next year. By that same principle, if I have $70,000 of debt, So I've bought an asset, I own a house, and I have a $70,000 mortgage. Let's just say, I don't know in what world that would happen, but let's just say I have a $70,000 mortgage for argument's sake.

If the value of the dollar is going down, that means the value of my debt is going down. So that $70,000 today costs $70,000 of today's dollars. But if the value of the dollars goes down to 60 or $50,000 next year, That debt essentially is decreased in its value to 50 or $60,000. And that's in comparison to the asset value that it backs. So basically I have an asset, I buy a house, the value of that asset is going up, let's say, or holding where it holds, but the debt is worth less and less and less because the dollars to buy out that debt are worth less and less and less. And so when you have inflation, it actually helps people with assets by increasing the value of their assets and decreasing the perceived value or cost of their debt while people that earn a money and generate an income, inflation deteriorates their buying power, deteriorates the dollar value of their income and the value of their savings, their retirement, everything.

And so the way this economy works in Canada is it obliterates people who are just generating income. So they're working, making money and whatever, and it helps people that have assets because the assets are driving up and up and up in value. If you want to position yourself or your family in a way that is beneficial in this kind of economy, you're trying to figure out how to get out of that rut, it's understanding that assets are your key out. And the good thing about assets is that you can get into assets for a very small fractional value. Assets don't always mean I have to buy a building. Buying a stock is an asset, it's a piece of a company, right?

Buying precious metals, silver, gold, which were an incredible hedge over the last few years for inflation if you saw what happened to them recently over the last six months. So whether it's buying a silver coin, an ounce, for 100 bucks, because now it's 100 bucks, I remember when they were $19 an ounce, or it's buying a stock in a company that you believe in, or it's buying real estate, or it's buying a fractional share of real estate, or it's getting together with a bunch of friends to buy real estate, whatever it is, the only way out? of what's happening to the economy right now is getting as much of your money as possible into assets, any kind of assets, because this isn't going to change.

The Canadian dollar is continually getting devalued. It's going to continue to be worth less and less and less, and you're just going to keep working. And the value of your work is going to decrease and decrease and decrease. And this will get worse with things like AI. Like AI is coming in and it's gonna generate all kinds of levels of productivity, but it's gonna replace a lot of jobs. It's gonna make your job worth less.

Like I'm gonna pay you, if I'm an employer, I'm gonna pay you in relation to the value you can create. But if AI can do a lot of what you do, I don't need to pay you as much because it's not worth as much not only is the work you're doing now gonna be worth less and less and less intrinsically because of inflation, it's gonna be worth less and less and less strategically because of AI. So it's a losing battle. You will never get out of it. If you just continue to make money and hope that you can save your way out of it, pay your bills, you will never ever ever get out of it. The only way you get out of this insane economy in Canada is get your money into assets as fast as you can.

Sacrifice whatever you need to, skip the next three vacations, sell the expensive car, get rid of the payments, downsize like the house that you're in per se if you can get it into more productive assets. What this looks like practically, like I said... Pick assets that are within your current budget. How much can you afford to actually invest? If you have millions of dollars in savings, you need to look at efficient assets to deploy that in, right? That's usually something like real estate or you're buying businesses, but not everyone wants to obviously buy an operating business.

So real estate is a great play because you can deploy large amounts of money quickly. It's a single purchase. If you're just starting out, stocks are great an ETF that tracks any index fund basically, the S &P 500 or the TSX 60 or whatever it is, get your money in some sort of index fund where you're putting a few hundred bucks every month into that and just start stacking that up because at least that's getting you into assets that are gonna like basically protect you from that inflation. So even if they're not having incredible gains of any kind, at least you're in physical companies, not holding dollars. If you don't understand stocks, or that's too complicated, you've never traded them, you don't really know how, or you're gonna learn, but you're not there yet, metals are the absolute easiest way to get your money to assets.

Silver, gold, I mean, those are primarily the best ones. Like diamonds got destroyed, so they were never a great thing to begin with. But you can look at alternative metals, there's rhodium, there's platinum, but silver and gold have been standard for.. thousands of years and they continue to do well. They have done well for thousands of years. They have done well the last hundred years. They have done well the last 12 months.

Metals are easy because anyone can buy them. You can understand them. It's physical. You can hold it. You can sell it and liquidate it easily. So you find a precious metals dealer.

There's so many people that sell gold and silver, bullion and coins. There's websites now online. There's physical stores all over Canada that you can literally walk in, ask questions, learn about metal and buy. You can buy, start with one silver coin, a hundred bucks. And it can be fairly efficient as you get into gold, because gold's somewhere around $7,000 an ounce right now, and it's a tiny coin. So you can hold in your hand probably $100,000 worth of gold, no issue.

And it's a great way to deploy small and large amounts of capital to assets. And it 100% protects you from what's happening to our currency. The more you can get of that, then you can, like, let's say you start with silver, you start rolling out into gold, you accumulate enough gold, and you say, hey, I wanna buy some real estate. And then you can get to real estate. And real estate is obviously infinite in its upside in terms of how much money you can put into it. We know the majority of high net worth individuals park their wealth in real estate for exactly that reason.

You can put $500,000 into a deal. You can put... $500 million into a deal, you can put $5 billion into a deal. There's not going be enough sides. So you're going be able to do very high quantities of capital without the restriction. Whereas metals will get semi restrictive when you get to certain levels. But for most people, metals are a great starting point.

Stocks, if you're semi sophisticated, you don't even have to be that sophisticated because there's platforms like Wealthsimple and stuff that really make it easy and automate it. And then ultimately everyone wants to move towards real estate. That's the way you want to move your money. So whether you're just starting out, you live in paycheck to paycheck right now you're trying to figure out how to get out of that rat race and you're starting with a silver coin a month or you're fairly sophisticated, maybe you're a high net worth individual that's already accumulating a lot of wealth, you're a business owner, you're making seven figures a year but it is mostly in cash or cash equivalents and you don't really know what to do with it because you're just making money, you're focusing on your business, like what else do you do and in case real estate is a no brainer right off the bat.

And real estate also is amazing because there's multiple options. You can buy stuff on your own. You can buy stuff with a partner. You can invest in various kinds of funds, private equity funds, REITs. You can even invest in real estate in public markets like public REITs like RioCam, where you can put money in these large portfolios of properties. Personally, I'm a huge fan of commercial real estate.

Residential real estate scares me for a lot of reasons. Like you have a lot of regulatory issues around tenants and just getting people out when they don't pay destroying units, the court system siding with tenants. There's a lot of instability in that for me and headache. Commercial non-residential, so things like industrial, retail, office, these are all incredible assets that you can still find that now will cashflow, that will pay you every month, that will increase in value and have very, very low management. And personally, I'm an operator of that stuff. Like I'm looking to buy stuff and evolve in it, manage it, optimize it, force and increase value and run with that as an asset.

But there's people that can do that passively. You can invest alongside people like me. You might have friends that are in real estate or people that you know, and you can put your money alongside what they're doing. Like let's say theoretically, this is not an investment pitch by any means. Let's just say I'm looking at an industrial property myself and I've identified an opportunity. And this is the great thing, by the way, about real estate is you can actually make real estate worth more very quickly and it's not income based.

It's not, I have to work so many hours. It's just value positioning. So I can buy a rundown warehouse that's vacant. That's falling apart. I can go into that warehouse. I can split it up into eight units.

I can renovate it. I can lease out all the units and I can make that building worth a million dollars more, $2 million more in the span of a year, just by changing its use and its lease profile. And then I can rent it out, generate money and I can refinance it, pull a bunch of money out great things. And if you're listening to this and saying like, what are you saying? don't understand what you're saying. Passive investment is a great opportunity. You could work with someone like me and say, listen, I don't know what you're doing, but that does make sense.

I like it, it sounds good. How can I get involved? And there's opportunities with me and many other people to invest alongside in deals like that, whether it's through a JV structure, which is like a joint venture where you and someone else are owning that deal and you just kind of define your roles where someone is more active, you're passive. It can be through what are called limited partnerships where you're essentially just investing money in a project have no sort of control or oversight, but you also are sheltered from a lot of the liability of the project. This is very common it's how most funds raise money, it's through a limited partnership structure.

And there's a bunch of other stuff, like I've already mentioned, like public access to reads, private reads, all that fun stuff. But real estate is an incredible avenue to get out of this rat race that is the Canadian economy. It's a good way to get out of income and into something that will actually go up in value every year, even if you don't see it. Like what a lot of people are not accounting for is if real estate even holds the same price year to year it's actually still winning because your dollars are not, right? So if your comparative value adjusted for inflation, of course, not unadjusted, but adjusted for inflation, if the value of a property is the same year to year, that's still protecting your wealth much better than the value of cash would, right?

And so on top of the fact that it actually generates income on top of that value so anyway, point is Canada has that problem. The faster you learn that this is an asset-based economy, the faster you get out of that rat race, the faster you stop worrying about affordability and how are you gonna make the payments and how are you gonna afford your... You have to put yourself, if you haven't already in a position to get as much money as possible into assets, any assets of your choosing. Do the research read books, watch videos, there's so much stuff out there. Just figure out what assets make sense for you, your family, your risk tolerance, and get your money into assets.

That should be your number one goal over the next 24 months, is how do I take dollars and turn them into assets? That's all you need to do. That alone will solve the majority of your issue, and it's the only path. It doesn't happen overnight, but over the course of five, six, seven, eight, nine, 10 years, you'll put yourself in a position where you're not relying on just your paycheck that is worth less and less every week. And you're putting yourself in a position where if AI does dominate a lot, like we're already seeing mass layoffs. Canada saw almost 84,000 jobs lost in February of 2026 last month.

So that's gonna continue to happen, it's gonna continue to get worse. And then it's not gonna be you worrying about not making enough money, it's gonna be you worrying about not making any money at all. And the only thing that's gonna protect you from that is that you own assets because the future of this country, I strongly believe, especially with AI is going to be basically the haves and have nots at the most extreme you could ever imagine. And what that's going to look like in practice is going to be basically the wealthy, the independent and the free will be either technology owners or landowners or broadly asset owners. So it's going to be people that own stuff and people that don't.

And the people that don't will have to settle for some sort of, like you're to hear all the billionaires talking about this, like Elon Musk saying that universal basic income has to come. It's the only way forward. So you're gonna have the majority of the population that used to just be income earners that were operating in an income economy, they're gonna get completely displaced, no need for them anymore, no ability to produce income. They're gonna have to go on UBI, universal basic income. They're gonna get a check in. It sounds great, but it's not.

It's gonna come with all kinds of strings. Your freedom's gonna be limited. Your privacy's gonna be limited. You'll have no mobility upwards or down. You'll just be stuck in this like weird stagnant state. You don't wanna be there.

And then there's gonna be asset owners, people that own stuff, technology, land, property, companies, and they're gonna continue to increase in wealth and control of freedom and mobility, that's where you wanna move towards as quickly as possible. You have maybe, maybe 10 years to do that before there's really no way out. We're in a point right now where the majority of Canadians that are still operating, like I said, in that income economy, they have 10 years to get out of that or be stuck in that basically class forever. You're never gonna get out of that. And the window is closing quickly. And you don't need to be a genius.

You don't need to have a ton of money. You just need to be strategic in how you play the next 10 years in getting your earned income into assets. This is not a new concept. It's just becoming more and more important than ever. Let's wrap it up there. That's today's episode.

I think that was critically important to talk about. I'll go into more detail. If you guys, of course, have feedback or questions for future videos, I can go deeper into that. Let me know what parts you want me to talk more about, what parts maybe were confusing that you want clarity on, or what parts you want some real tactical strategies on. And I can drill a lot deeper into that. So that's it for today's episode.

Don't forget to like, subscribe, follow the podcast. Podcast episodes are available everywhere on Apple, Google, Spotify, full videos on YouTube here so we're pretty much everywhere along with my Instagram you follow at Darren Cabral you can follow along with these clips and little bits and pieces of the podcast there as well and other than that I'll see you guys on the next episode