Almost exactly one year ago I wrote a piece on my old blog about Canada’s economic situation. In it I concluded there were two possible outcomes in the medium term:
So Canada, we have a big decision ahead of us. Do we decouple the CAD from the USD, effectively cutting off trade with them, but returning our dollar to a reasonable value? Or do we keep the trade going by devaluing our own currency and thrusting 8% or more inflation on Canadian citizens. I’ll be honest, neither option is without it’s downfalls. We will not escape this crisis pain-free.
Originally it had appeared that we would be sticking with the USD and strengthening trade with them and the other western nations, however I now believe we have reversed our position.
In the introduction of my budget analysis I hinted at a possible “conflict of interest” that was developing, since then several other events have occured which for me confirms some of my original thoughts; the most notable of which is Flaherty’s recent IMF rebuttal and today’s speech. In his speech Harper said something very notable:
Prime Minister Stephen Harper marked the anniversary of his Conservative party’s first majority government by telling members of his caucus that Canada must align itself with the economic winners of the world to ensure continuing prosperity.
The “economic winners of the world” is one way to put what’s happening, I guess. It’s pretty clear who Harper thinks the economic winners are. Flaherty’s IMF rebuttal comes shortly after the BRIC nations started challenging IMF financial superiority. Sure in his rebuttal, Flaherty praises the IMF, we are still pursuing western trade deals, this is not a complete write off of western economic power. There is a question though as to how tight a line we are walking. We are land-locked with U.S. interests, if we are planning to decouple the CAD from the USD it most certainly would be done covertly and without announcement.
As I have previously explained, and which was confirmed; as long as the U.S. continues easing our interest-rates are held hostage if we are to depend on trade with the U.S. for revenue. Raising interest-rates will effectively price the U.S. out of the Canadian export market. Since it looks like the BRIC nations are going to move ahead with a similar plan – it then becomes a question of which is more valuable: revenue from the U.S.? or affordability for Canadians? If the BRIC’s move away from a USD standard then the cost of products these nations produce will skyrocket in terms of USD. If the CAD is to compete with BRIC currencies then it cannot be tied to the USD or the same cost increases will hit us.
The result of these economic moves will not be good for the U.S. should they happen. They likely would sink to third world status virtually over night and an energy crisis would begin instantly. Countries that the U.S. considers allies may not be so willing with the American military underfueled. If a situation like this were to happen, no doubt the U.S. would be preparing right? (‘ATK Wins Five-Year, Indefinite Delivery/Indefinite Quantity Contract for .40 Caliber Ammunition from DHS, ICE –Additional .40 Caliber Ammunition Contract with 450 Million Round Potential Demonstrates ATK’s Leadership in Ammunition Manufacturing‘, ‘EXECUTIVE ORDER – NATIONAL DEFENSE RESOURCES PREPAREDNESS‘, ‘NDAA‘) Big things are moving under the carpet, I can only speculate as to the scope of these movements.
The world isn’t too happy with the U.S. right now, they’ve grown tired of constant war and obvious lies. There is a global economic realignment happening and I don’t think Canada is opting to go down with the USD ship. These nations we are aligning with however do not cherish democracy as we do. We will be a minority in this new alliance, and of this we should be wary.