The Canadian Press reports that our dollar hit an eleven year low dipping below 72 cents US. Two reasons are highlighted : one the low price for commodities especially oil and gas and the other , the US Federal Reserve finally stopping that ‘ quantitative easing’ or in layman’s terms printing more money to force feed the economy , and is now taking a more responsible action of moving the basic interest rate up one quarter of a point. Not earth shattering but at least a move to stabilize the US economy and for it to run a little more on its own. This obviously affects Canada negatively since it shows the US being more responsible however small that might be.
The level of debt in the world , caused a lot by central banks like the Federal Reserve , has reached unacceptablrpe levels . If you read David Stockman ( just google in his name and you will get his active website) , former budget director for Ronsld Reagan , you will get the view that we are in for a rude awakening because of this debt in all the major economies .
Now, on our dollar predicament , it is true this fall vs the US dollar is as a result of the two factors mentioned . But the more fundamental long term factors in addition to commodity prices , and responsible monetary policies are: productivity and competitiveness . Our productivity vs the US is only 70%( every time I mention this to a fellow Canadian , they either fall silent or change the subject ) and our overall global competitive position is 13th , the US is 3rd . Our global position on innovation and business sophistication is 24th. These stats are not mine but produced by the Global Economic Forum.
Making it worse now ? Well , with our new photo op , left leaning , deficit promising , Federal Government , any chance for fiscal prudence and less interventionist policies are gone out the window . Add to that one of Canada’s real economic engines , Alberta , going socialist in the midst of the oil price slump , and then to watch it raise taxes, review royalties , and implement additional ‘green’ regulations exacerbates our deteriorating situation.
And , presently , last week that is, the Paris Agreement . Unlike the US , where Congress has no intention of financing this global charade , our Parliament is firmly in the pocket of the left and loves all this inefficient bureaucratic elephant of a UN which is seeking more and more billions of dollars for their pet so called ‘sustainable’ projects, such mitigation on carbon being evaporated with a volcanic eruption , or some grass fires in Australia , Indonesia or the western US.
Now, if you think the investors of the world have not noticed our new Princeling and his deficit ways, and the socialsist actions of Alberta , not to mention our wayward big cities, then you have left this galactic location for another.
Our dollar trades , if you will , in the ‘currents ‘ of the world , and looking at us now , they veer the other way .
That means, the dollar ‘tanks.’