The Bank of Canada warned Wednesday that a high dollar and poor productivity are keeping Canadian businesses from taking full advantage of a strengthening global recovery.
Does anyone still buy this shit?
In its latest global and domestic economic outlook, the bank said the dollar has been stronger than it predicted in its October forecast, with the currency trading at parity on average, two cents above the assumption the bank made in the fall.
This is great news. A stronger dollar will increase Canadian's purchasing power, lower capital costs (great for our manufacturing sector) and boost our standard of living. Holders of Canadian dollars can buy more for less. There's no need for coercive minimum wage laws when someone who gets paid $5 a day has more purchasing power than someone getting $100 an hour in a weaker currency.
"While near-term growth prospects in the United States and other foreign economies have significantly improved of late, competitiveness challenges are expected to leave the projected profile of Canadian export growth only slightly stronger than previously anticipated," bank governor Mark Carney and others on the rate-setting committee said in its Monetary Policy Report.
Mark Carney is either paid to be ignorant (probable scenario) or he really is one dumb motherfucker. There is no US recovery.
New measures by the U.S. government and a massive bond-buying program by the Federal Reserve will stimulate the American economy to grow by 3.3 per cent this year, the Bank of Canada predicted.
I don't even feel like writing the rest of the post. This is like arguing with a twelve year old... no, sorry, that's offensive to twelve year olds. Even children realize that what the Fed is doing is pure inflation. Growth my ass, the GDP may rise by 3.3 percent, but Americans standard of living has got a long way to fall before they ever return to pre-Financial Crisis days.
The bank said Canada's lower-growth profile is mostly due to the appreciation of the loonie, but also said Canadian firms haven't been as diligent as their rivals at improving productivity. Labour costs per unit of output in Canada have increased by 31 per cent relative to the U.S. since 2005, it said, with two-thirds of that gap accounted for by the appreciation of the loonie and one-third by poor productivity.
You know what's a great way to lower labour costs? Dealing with a currency that isn't losing its purchasing power on an annual basis. The fact that Carney is blaming a lot of Canada's problems on the appreciation of our loonie is a red herring that, as the Fed debases the US dollar, the BoC will be playing catch-up. Forget any deflationary depression, the BoC will ensure that Canada inflates it way to oblivion.
Even compared to a sampling of 42 countries tracked by the Organization for Economic Co-operation and Development, Canada does not do well, with relative manufacturing labour costs having increased by 17 per cent in the past five years.
Once again, the way to lower manufacturing costs isn't to keep printing money, but to allow for the loonie to appreciate and allow the increased purchasing power to bring down costs. Of course, in the short-term this will probably hurt our export sector but in the long-term this will benefit everybody. People will buy Canada's resources despite how much it cost, and the Chinese need manufactured cars (and they pay in cash). The sooner we de-attach ourselves from the USA, the better off Canada will be.
With that said, I feel it's important to repost this link to Peter Schiff on BNN.