Canadian Dollar Luck

I'm not a currency expert - I only play one on the internet - but here's my take on the Canadian dollar.

It's a source of pride - for some reason - to many Canadians the dollar hovers around the USD. Yet, it's not like investors are flocking to the CDN as a flight to quality; gold is the choice.

Rather, the recipe for its success is a combination of rising oil prices (and other commodities) and an American recession. Simple as that. It has little do with our overall economy being "stronger" than the United States. It's more stable relatively speaking but that too is precarious.

The value of a currency is often based on perception. Right now, the USA is losing its status as the world's currency. Their fall is our gain but not out of us being a viable replacement but by happenstance.

Nothing to brag about. But it sure does help when shopping there!

The Canadian economy, as should be reminded from time to time, is intimately tied to the U.S. economy. We will eventually feel the pinch. It's as predictable as an Adam Sandler flick when 85% of your trading power is with one partner. It's the quintessential put all your eggs in one basket connonnonodrum.

How any Canadian can sit with a straight face and ignore this reality really needs to let go of their nationalism.

Anyway.

The Canadian economy is rolling along quietly. Productivity is up. Unemplyoment has steadily gone down under Harper's watch but 7.4% is still high in my opinion. The U.S. rolled along with 4.9% with a much larger, more complex economy. Canada is fairly well managed financially.

As for prices of goods and services, I don't know why we pay higher prices on things like books and TVs. I suspect a large part of it is "supply and demand." If there's more demand and competition, prices go down. Canada is far smaller a country than the USA and has fewer consumers nor does it produce many of its purchases (importing them from elsehwhere. Or manufactured here as a subsidiary), so somewhere along the way, someone is passing along those costs. To say nothing of taxes. Economies of scales or something to that affect.

Personally, I don't shop much in Canada where given the choice. You're stark raving mad if you accept at face value Canadian retail prices. People who complain about Indigo prices, here's an idea, shop online! Buy an eBook. Or go to Vermont or if you're lucky (like we were in Maine), happen to visit a Borders book shop liquidating its stock. I bought a classic Italian cook book with over 2000 recipes for $9 - original retail price $55.

There are options you know. Personal choice hasn't entirely been erased...yet.

I digress.