Inconvenient Debt

the only question i have is why are we following this example? pmsh is supposed to be a smart guy. our dollar should be soaring not dropping, even if oil is still down.

It troubles this old white guy too, O-W-G, but Mr. Harper is the man I want in the driver's seat right now and - believe it or not - there are bigger issues Canada faces than the economy - like security, law and order, runaway human *rights* and subsidizing union jobs/pensions with taxpayers' money.

The US doesn't have a clue where O-economics is leading ... I believe Mr Harper UNDERSTANDS what he's doing, and the risks involved. He is NOT a dillusional man.

Chairs

That was the first thought that came to my mind as well old white guy.

I think a lot of our dollars decline is simply the fact that our economy is joined at the hip with the American’s and is heading down in sympathy/fright. I am not so sure I want to jump more heavily into the stock market just yet to average out but long on certain currencies may not be a bad idea.

Actually I think the best idea is just stick to my business, take my 19% loss and golf more, to hell with the markets.

There is a definite disconnect between the Canadian and American Dollars. The Canadian dollar is weak, in relative terms, to the Greenback and lower prices of our natural resources is the main culprit.

The US dollar is maintaining some strenght due to money leaving the stock and bond markets and into US Treasury Bonds. Much of this is going into "Zero Cupon" yields. Folks are willing to accept no return on their money so long as they are assured the return OF their money. Its a supply and demand thing. There is lots of demand for these bonds so the American buck shows strenght. Its a supply and demand thing.

The US Treasury Bond market is where the next bubble burst will happen. When, you ask?

The burst will happen when the stock markets sense that the economy is turning around. Money will fly out of these bonds and back into the market for the ride up. The sell-off of the bonds will cause the US dollar to loose value.

A turn around in the economy will cause comodity prices to surge which in turn will cause the value of the Canadian dollar to rise. So, you'll see a double whammy effect on the difference between the two currencies when the economy turns around. With the amount of money being put out by the US I would not be surprised, at some point, to see the Canadian dollar overtake the value of a US buck by a considerable margin.

Dump US dollars if you have any.

That's cool! Maybe we should start using log curves for monetary expansion.

a different bob, I fully agree.

I think one thing we should also not forget is the distinct possibility of hyper inflation in the US because of their drastic increase of dollars in the market. I think the O ring has set the States up for a lot more than they expect, in a lot of areas, not just financial.

If Harper can stave off the stampede of liberals and their media front men here and remain calm our dollar and economy should do exceptionally well, I'm hopin.

I love Glenn Beck. Fox needs to give him a prime time show.

The abandonment of metallic backing of paper money was achieved by Richard Nixon in 1971 when he discontinued the promise that the US dollar could be exchanged for it's value in pure gold. It was primarily a symbolic move by the last of the major currencies to do so. Since that time international exchange has operated on a "fiat" currency basis with the US dollar (instead of gold) acting as the default global currency. Currencies "float" based on their value relative to the US dollar. International currency speculators set values daily by pitting one currency against the other using billions of units. Various factors contribute to this process however in general terms global monetary policy resides with the that curious compromise known as the Federal Reserve.

Governments of the developed world reserve for themselves the right to control their respective money supplies. This function is usually performed by the central bank, a supposedly independent organization. Coins and paper money only represent a small fraction of any nation's money supply with the vast majority being represented by bank credit. While journalists and pundits like to use the cute phrase "printing money" in regard to governmental fiscal policy, the fact of the matter is that central banks only maintain in circulation an amount of currency sufficient to meet the demand for it's use. The rest is created (and destroyed) through the private banking system as interest bearing debt, hence the term "debt money system".

Private banks like to maintain that they only lend out their depositors money. However that charming fiction is belied by the existence of fractional reserve banking. Private banks are only legally required to maintain a fraction of their deposits against their loans. This process is known as leveraging. Historically, banks have preferred leveraging their loans into government treasury notes since the return of the investment is guaranteed by the the taxpayers of a given country.

At the international level US dollars flow around the world lubricating the global economy in much the same manner that gold once did. This all works fine provided that a level of sanity is maintained by the regulator. The deflationary spiral that we now find ourselves in is a result of the bursting of an unprecedented debt bubble which was allowed to build up in domestic economies around the world. Less than sane policies in the US have, over several decades, led to a rot in the fiduciary structure which now must be confronted.

Thanks, Free Thinker- I learned something today...or at least some cobwebs got swept away and made for a clearer perspective of the larger picture.

Obamba is a Chicago political grifter, social activist and self admitted affirmative action hero. Steven Harper is a fiscal conservative and economics major having earned his Bachelor’s and then his Masters degrees in economics.

These guys are not in the same leadership league, rational spending and unbiased asset allocation for the overall economic health of a nation is the domain of PMSH. He must have been grating his teeth and unconsciously rolling his eyes listening to this little bigot hustlers spew when visiting a few weeks ago.

MSM reports even stated that Harper diplomatically lectured Obamba frequently. Waste of time that was to be sure.

The US dollar is in BIG trouble. The Canadian dollar is not.

PM Harper stated accurately in his economic speech the other day that we are well backed by resource and industry along with a strong banking system.

As stated the Canadian economy will slow and predictably falter in 2009 due to its ties with the failed US economy as Canada’s number one trading partner. But Canada will feel the effects far less than any other first world nation and will recover the quickest. Canada’s conservative policies are the envy of every European nation and it’s been repeatedly stated that some of the major European countries will be looking to Harpers government for guidance with emphasis on the Canadian banking system.

It will be a rough ride for many Canadians for the next few years, but we will fair the best of the bunch of a rotten deal. Thank you PMSH.

"old white guy" - can't listen to him?

The progressive police tell me who to listen to.

Put a bar chart in front of a lesbian Hopi woman in a wheelchair,

and you'll have something. Until then my ears are closed.

Oh ya, but exponential growth of anything is easy to stop.
Take nuclear fusion.........

Not stated in the article Free Thinker put up is the fact that the USA was in an economic squeeze caused by the Vietnam War. Ie paying for war.

An article I read later said the US abandoned over $450 billion worth of US steel rusting in the jungles. That's money taken out of the country never to be recirculated or create any jobs in the US.
And having a continuous trade deficit balance does the same thing.
The last year USA had a positive trade was about 1974.

Stuck with a gold standard they simply couldn't print enough dollars to keep economy rolling.

Going to the fiat currency easily solved the problem.
And allowed a new hazzard called a Shadow Banking system to develop.

What a surprize.

Glen's right on the money, so to speak.
If you ever get a chance read about how the Roman Empire in the West got weaker every time they devalued their currency, do so. Rebellions with wars where sure to follow. You see the same pattern in Europe in England, France, Spain. It seems to be an economic law that has destabilizing social consequences. Now I see why Ammo & guns are being sold out in the USA.
If the World decides not to use its currency as its basis as is now. Than it will quickly become worthless. 1000 % inflation anyone? Taxes no one can pay anymore. Livelihoods collapsing. A new barter black market instituted by a redundant dollar.
This is how you gut a Nation without a knife.
This will be the kookoo eggs legacy.
JMO

Posted by: Revnant Dream>

If indeed the US economy and dollar completely collapses, the physical havoc within the US could never be overstated.

The failed economic realities hitting urban centers will make the ’92 LA riots looks like a B ball skirmish. The historical lessons learned from Katrina (a week of disrupted service) proves the scale of violence on a small stage. Nationally it would be abominable.

A society 300 million strong propped up on entitlements and government assistance with the legs kicked out from under it will be ugly business indeed.

The big stage has been set across America in every major urban center now like a huge funeral pyre, someone just needs to strike a match, and it looks like Obamba has volunteered.

At least you guys have something China will buy after the crash. They aren't going to buy finished goods... ever. The only finished thing China buys from the US are complete factories.

Tim in VT:
If the States goes down the drain , so do we. We all know it only to well. This is the second largest Nation on the Planet with a small population. Ripe for plunder with invasion a prospect. With a crippled US military & crushing debt. China can just take it all.
Heck, Vancover is almost Chinese territory now as it is. Not that they would like it any better than other Canadians, having fled the tyrants years ago.
JMO

biff, can i push that wheelchair?