The $US has already depreciated some 20% against the $Euro. This has not resulted in any great advantage for US industry or US balance of trade. So long as the other half of the world, Asia, keeps lock step with the US, employing all the monetary and fiscal tools to keep their currency low, the FED's easy money can only be partly successful.
Manufacturing jobs in US compete with Asia also, and factories have been and continue to be based in China and elsewhere. That's where the competition for manufacturing jobs is. But the US is a special case, as US currency fluctuations affect the global monetary system because of its reserve status. Not many Canadian dollars are held as foreign reserves in say Saudi Arabia, for example, so the Canadian loonie can fluctuate without global consequence.
In my opinion, the US is trying to finance just about everything in the world. She therefore needs to keep printing money, and keep interest rates low, while at the same time trying desperately to talk other Central Banks into following the same path. Canada just went against the stream. Even if just slightly.
The consequences for all this money creation will become apparent....in time. (debt, default, inflation)
Phil |
