Jonny5
Senior Member
The
That's the past. So how is that impacting the future? There's the rub, because we are paying in the future, and materials costs are highly variable. There are no Inflation Elves that show up in the middle of each night to take a specific part of your money away based on what happened yesterday. When you are perpetually borrowing at very large dollar amounts you are literally a part of the market and so there need to be new explanations here and less hand-waving of "inflation explains it" because I fear we could also be locking in a project at a high cost unnecessarily on an assumption current inflation will continue, and frankly then be the suckers who both borrowed high and bought high.
The real point is if this is simply accounting for future inflation then that should be very easy to demonstrate with detail from available data on markets and financial instruments like derivatives products that project future costs. That should be something a competent government or agency can crank out in less than 24 hours. They already have this. They always have this. So they need to respond by publishing the projections and discount rates ASAP. The proof does not come from past inflation records, it's from their projections and there's zero reason not to share them.
Indeed - if you look at the current Building Construction Price Index for Toronto, it's up 25.9% in the last year. Since 2017, it's up over 80% - which averages to about 12.5% a year.
Much higher than inflation.
Building construction price indexes, by type of building, inactive
Building construction price indexes (BCPI) by type of building. Quarterly data are available from the first quarter of 1982. The table presents data for the most recent reference period and the last four periods. The base period for the index is (2017=100).www150.statcan.gc.ca
That's the past. So how is that impacting the future? There's the rub, because we are paying in the future, and materials costs are highly variable. There are no Inflation Elves that show up in the middle of each night to take a specific part of your money away based on what happened yesterday. When you are perpetually borrowing at very large dollar amounts you are literally a part of the market and so there need to be new explanations here and less hand-waving of "inflation explains it" because I fear we could also be locking in a project at a high cost unnecessarily on an assumption current inflation will continue, and frankly then be the suckers who both borrowed high and bought high.
The real point is if this is simply accounting for future inflation then that should be very easy to demonstrate with detail from available data on markets and financial instruments like derivatives products that project future costs. That should be something a competent government or agency can crank out in less than 24 hours. They already have this. They always have this. So they need to respond by publishing the projections and discount rates ASAP. The proof does not come from past inflation records, it's from their projections and there's zero reason not to share them.
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