We can not raise interest rates to reasonable levels until the U.S. raises their rates to reasonable levels. If you don't understand much about modern currency, what is important to know about this is that banks create 95% of the money in circulation, through loans, which has compound interest attached. The more money in circulation, the more "inflation" (in reality devaluation as real inflation should come from a true increase in wealth). I've written more about inflation and fiat currency here. If we raise our interest rates too much above the U.S. to discourage cheap loans, there will be a decrease in the amount of currency being injected in to the system. If the U.S. dollar depreciates too much beyond our currency they will not afford to trade with us. I first wrote about this interest rate debate last April.
Well, finally, the real reasons for our low interest rates is being revealed (probably because the household spending argument has no teeth since it still continues to grow): High loonie will keep rates low until 2014, TD says
Massive injections of money by central banks to aid ailing economies is having the effect of keeping the Canadian currency higher than it otherwise would be against other major currencies, TD Bank economists said Thursday.Well holy fuck-balls, isn't that amazing? Funny this was never mentioned during the last year of interest rate fear mongering. Of course, readers to my blog (as always) knew this was exactly the reason though, didn't you?
But hey, this isn't the only admittance to come in today, no no, it gets EVEN BETTER!!
Redford says new spending in Alberta budget won’t match population growth
Now, the official budget for Alberta won't be released for a few hours yet however I think we all know what it's going to entail: cuts to service and a budget deficit. Seriously folks, how much more evidence do Canadians and Albertans need that oilsands prosperity is a huge lie? Does no one understand it's not going to end? that this is now our current situation: where Alberta needs the oilsands to "grow" but to get them to grow requires even more people and those people require ever increasing levels of service? The oilsands WILL NEVER, from this point forward, provide more return than the required spending to keep them operating in the first place, Alison Redford is telling you as much right now.
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Richard Fantin is a self-taught software developer who has mostly throughout his career focused on financial applications and high frequency trading. He currently works for eQube gaming systems.
Nazayh Zanidean is a Project Coordinator for a mid-sized construction contractor in Calgary, Alberta. He enjoys writing as a hobby on topics that include foreign policy, international human rights, security and systemic media bias.