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Gold/Mining/Energy : Big Dog's Boom Boom Room
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To: Cogito Ergo Sum who wrote (82592)4/5/2007 9:57:42 PM
From: ChanceIs  Read Replies (1) of 206272
 
>>>resistance to a stronger loonie..<<<

Canada has an interesting problem - but the right kind of problem to have. It is well know that countries with increasingly highly valued natural resources experience hyper inflation. Spain certainly did after Columbus started the gold flowing home from the new world. Canada's hydrocarbons are putting it in a similar situation.

What to do about it???

Milton Friedman liked to say, 'Inflation is too much money chasing too few goods.' Raising interest rates and/or reducing the currency in circulation addresses the "too much money" side of the equation.

Instead of raising rates, maybe Canada should throw a lot of excess cash at building more and efficient manufacturing capabilities. Hell, they should probably annex Detroit. I bet that "W" and Daimler-Chrysler would pay Canada to take it off of their hands. You know - more goods to chase the more money - stable prices.
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