someone correct me if i'm wrong here... but to my knowledge, the US dollar will be worth less and so in the foreign exchange market you will see people selling their USD and thereby increasing the supply of USD on the market... this and with a whole bunch of factors contribute to the fall of the USD
now in the American perspective, this may be a bad thing since their dollar value is decreasing, and the feds are doing what they need to do to stabilize this.. decreasing the interest rate, print more $$ to encourage more consumption and now there's this Canadian craze of flooding the US borders.. I would say they're not doing as bad as it seems..
In the Canadian perspective, it's a good thing for most of us since our dollar value is worth more (yay!!), however our import/export fees have also gone up and therefore that's going to affect us directly.. you would probably notice that some imported goods in the grocery stores are more costly nowadays.. and people who import Canadian goods are reluctant to do so because of the increased importation fee (due to the increasing CAD dollar value)..
There are many good/bad things about a depreciating dollar; seeing as how economists are predicting that the USD will only continue to fall because of many reasons including the sub-prime mortgage crisis and their CRAZY pile of debt b/c of the war, here is what I think about the long-run (for Canada and the US at least) with pretty basic concepts:
US exports will be much more affordable for other countries to buy, so many countries may decide to purchase american goods (like canadians going over the border to go shopping). This could be good for the US, it MAY create more jobs because companies would need to keep up with the demand and increase production.
But alternatively, as consumers we wouldn't be purchasing from our canadian market, so in the long run the cost of goods here will go down...but that's going to take a while to take in effect.
Since the CAD is just a little bit over parity with USD, it's not too much of a big deal yet, but if the USD continues to fall even more, our major exports to the US like lumber or energy will likely be affected since it's going to be super expensive. Luckily though, the Asian economy is (and has been) in a boom and construction has gone up like wildfire over there--and we export to them. So we're still making lots of money from them.
I'm interested in the fact that the US, over the past decade, has been outsourcing many types of jobs to other countries. They need to provide more jobs at home, so more people can have more income because in MY opinion, i think they'll be in for a rough time. Especially with the war costing at about $460 Billion so far, and the sub-prime mortgage crisis, US needs money badly, and how else are they going to get money? By borrowing. but how do they pay people/countries back? by printing money. and when the Fed prints shitloads of money, there is less value attached to each dollar... just one possible reason (among many) that is causing the USD to fall.
haha there is never a straight answer for an economic question. it always seems to be "it depends"
What's been happening in Canada recently has actually been a bit unusual; I read a nice exposition on it but basically it boils down to this: the foreign trade component of Canada's economy has actually been shrinking over the last several years, and this effectively insulates Canada's economy to a greater extent from changes in the value of our currency compared to years past.
So as far as the economic impact of the parity with the US dollar, I think we will find that it is quite blunted when considering the old adage, "When the USA sneezes, Canada catches cold." :)
So as far as the economic impact of the parity with the US dollar, I think we will find that it is quite blunted when considering the old adage, "When the USA sneezes, Canada catches cold." :)
I interpret your statement as saying that it is no longer appropriate to maintain that the US and the Canadian economies are intertwined. Yet I believe the popular opinion is still that they are (as much as I'd like to agree with your statement). What reasons do you have for stating that the economies are no longer so intertwined as commonly thought?
Primarily due to a combination of the increasing insulation of the Canadian economy from the world (trade as a fraction of our GDP has dropped from ~45% to ~35% inside of a decade), and the job losses in the auto sector which have reduced the importance of exporting manufactured goods to the US.
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now in the American perspective, this may be a bad thing since their dollar value is decreasing, and the feds are doing what they need to do to stabilize this.. decreasing the interest rate, print more $$ to encourage more consumption and now there's this Canadian craze of flooding the US borders.. I would say they're not doing as bad as it seems..
In the Canadian perspective, it's a good thing for most of us since our dollar value is worth more (yay!!), however our import/export fees have also gone up and therefore that's going to affect us directly.. you would probably notice that some imported goods in the grocery stores are more costly nowadays.. and people who import Canadian goods are reluctant to do so because of the increased importation fee (due to the increasing CAD dollar value)..
US exports will be much more affordable for other countries to buy, so many countries may decide to purchase american goods (like canadians going over the border to go shopping). This could be good for the US, it MAY create more jobs because companies would need to keep up with the demand and increase production.
But alternatively, as consumers we wouldn't be purchasing from our canadian market, so in the long run the cost of goods here will go down...but that's going to take a while to take in effect.
Since the CAD is just a little bit over parity with USD, it's not too much of a big deal yet, but if the USD continues to fall even more, our major exports to the US like lumber or energy will likely be affected since it's going to be super expensive. Luckily though, the Asian economy is (and has been) in a boom and construction has gone up like wildfire over there--and we export to them. So we're still making lots of money from them.
I'm interested in the fact that the US, over the past decade, has been outsourcing many types of jobs to other countries. They need to provide more jobs at home, so more people can have more income because in MY opinion, i think they'll be in for a rough time.
Especially with the war costing at about $460 Billion so far, and the sub-prime mortgage crisis, US needs money badly, and how else are they going to get money? By borrowing. but how do they pay people/countries back? by printing money. and when the Fed prints shitloads of money, there is less value attached to each dollar... just one possible reason (among many) that is causing the USD to fall.
haha there is never a straight answer for an economic question. it always seems to be "it depends"
So as far as the economic impact of the parity with the US dollar, I think we will find that it is quite blunted when considering the old adage, "When the USA sneezes, Canada catches cold." :)