Bon Echo Provincial Park, Ontario, Canada.
Where are Kevin and Ruth now? Ottawa, Canada.

Where are Kevin and Ruth going next? Reuniting with Max in Germany on October 1st.

Wednesday, April 21, 2010

The economy

I like to follow what the economy and financial markets are doing. Yesterday, the Bank of Canada said that their record low interest rate policy is about to end.

And when they said that, the Canadian dollar increased over a cent and a half versus it's U.S. counterpart.

The Canadian dollar is now worth more than the U.S. dollar. This has not happened very many times in our history. But I think it's going to continue to be worth more and more.

You Americans may not notice, or maybe even don't care. But what is happening is that any goods exported from Canada to the U.S. are going to get more expensive. Canada is the U.S. largest trading partner. This obviously causes inflation. Inflation causes people to stop spending, or to spend less. This causes the American Federal Reserve to keep U.S. interest rates low. This keeps international investors from buying U.S. dollars. And the Canadian dollar heads higher.

And the U.S. is essentially bankrupt. How this plays out over the next few years will be very interesting.

1 comment:

  1. The US will continue to fall as the economic and military super power over the next several years to be replaced by China (who holds a bulk of the US debt I believe).

    If you've ever read "Atlas Shrugged" by Ayn Rand, you'll notice many similarities.


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