Tuesday, October 20, 2009

The Dime Store Theory of Monetary Policy

Please don't get scared off by the title. I just want to ventilate about those feeble-minded Canadians who are "proud" our humble loonie is close to catching up to the almighty American greenback.

Let me first say that I don't travel to the US - not because I wouldn't go there, but I just have no compelling reason right now. Also, Mrs. Nanuk would have serious difficulties in crossing the border, but I will say no more about that. The only American products I buy (besides pr0n and eBay retail goods) are fruits and vegetables - mighty fine edibles, but more and more Mexico and Chile are becoming major suppliers of these commodities.

I support a seriously under-par Canadian dollar. Our greatest prosperity in recent times has been when our currency was wallowing in the low 80¢ range vis à vis the American dollar. Everyone was buying Canadian and our balance of trade was ponderously weighted in our favour. Americans (and many other nationalities) were flocking to our poutine stands, maple syrup megamalls, and butter tart bakeries here north of the 49th. Things were good and there was a chicken in our pot every Sunday.

But it didn't last. The prevalent banking insanity south of the border devalued the US buck and made ours rise proportionately. And it has been hard on the domestic economy. Why, a bottle of Jack Daniels actually rose about 20¢ and don't get me started on that fiasco of a citrus fruit retirement plan I dreamed up - the juice fast dried up in the proverbial pamplemousse.

All this in way of saying I am glad our central bank refused to raise its overnight rate today, and maintains that a high dollar is more detrimental to our economy than inflation.

You know, there are some comforting things to being the bargain basement store of the western world: you get lots of foot traffic, you don't have to dress up, and hell, they have cute underpaid high school students manning the registers.

Mediocrity has its advantages.

Sidenote: The heavily-regulated Quebec economy actually grew during the so-called recession. Actually, the bad economic times as experienced in the US were hardly felt up here in general, save for the oil patch and the rust belt. Time to step in and put some heavy-duty rules on your banking/securities sectors, my red, white and blue friends!

1 Comments:

Blogger Fuff said...

Damn right. If only I could make the rules...

8:51 PM  

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