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Columnists

The Bank of Canada blows it

By raising interest rates, the governor of the Bank of Canada has made a mistake. He got an easy question wrong. Is the economy expanding or contracting? He called it expansion, meaning output is growing, putting upward pressure on prices. The increase of 0.25 per cent in the overnight lending rate of the bank signals the beginning of a cycle of increases that will push all interest rates in Canada up over the next 18 months by as much as two percentage points.

World economic signs signal deflation meaning slower output, and faltering employment.

Inflation calls for interest rate increases, and government spending cuts. Deflation means no interest rate hikes, and government spending increases.

Columnists

The oil price-loonie transmission mechanism

Photo: Canardo/Flickr

The most interesting comments from Bank of Canada Governor Mark Carney last week, in releasing the Bank's semi-annual Monetary Policy Report, dealt with the relationship between the price of oil and the Canadian currency. The Globe and Mail reported Carney as publicly questioning why currency traders automatically presume such a direct link between the loonie and the world oil price. After all, he accurately pointed out, Canada produces a lot more than just oil.

Columnists

Canada supports dark side of international finance

You can say one thing for the powers that be in the banking industry. They've got a lot of nerve.

This past week, our own finance minister, Jim Flaherty, along with Mark Carney, the Governor of the Bank of Canada, came out strongly in opposition to a modest proposal to regulate the U.S. banking system.

Their interventions followed a concerted effort by American bank lobbyists to spark international opposition to U.S. regulatory reforms.

Why not lock in low interest rates?

| December 31, 2011

Modest inflation outstrips wages and Canada Social Transfer

| December 27, 2011
Columnists

Inflation targeting and the financial crisis

Many long-held tenets of neoclassical orthodoxy have fallen by the wayside in the past three years, but perhaps one of the biggest dominoes that is at least teetering precariously (if not fully tipped over) is the consensus that inflation targeting should be the exclusive focus of monetary policy.

The inflation-control target

| November 10, 2011

Wage deflation confirmed

| September 29, 2011

Outlook darkens as budget debate begins

| August 20, 2011

Thoughts on 'Why not print money?'

| August 11, 2011
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