XPost: can.internet.highspeed   
   From: Some@Guy.com   
      
   Canuck57 wrote:   
      
   > > You will not see inflation here unless the Bank of Canada raises   
   > > interest rates.  The bank rate is currently 0.25%.  A historic   
   > > low.   
   >   
   > That is not how it works.  Interest rates are meant to shore up   
   > currency value.   
      
   I don't know if you've noticed lately, but all countries are right now   
   in a race to the bottom when it comes to currency values.  Nobody wants   
   to have a high-value currency at the moment, because it kills exports,   
   and exports = jobs.   
      
   So nobody wants to "shore up" their currency right now.  Least of all   
   the US.   
      
   > By the time rates go up, the inflation is in the system   
      
   There is a lot of talk about printing money and the spectre of   
   inflation.   
      
   So far it's all just hot air.   
      
   The truth is that right now, cash is valuable because nobody wants to   
   lend it - people and banks are hoarding it.  Banks are making money on   
   overdraft and other bank charges.  They don't need to piss money away on   
   low-interest loans, lines of credit, etc.  Lots of people got out of the   
   stock market and into cash for the past year - or 5.   
      
   > Take US numbers, GDP up 3% but with unemplyment up to 22% that   
   > means fewer people working and less being produced, but the   
   > costs of the goods is higher.   
      
   The cost of goods is *higher* ???   
      
   On what planet?   
      
   > That is real inflation in the pipeline.   
   >   
   > Lets ahve this conversation in 3 months, if it holds you will   
   > understand more of the effects.   
      
   Consumer prices will be the same, or slightly lower 3 months from now.   
      
   > > The BofC will only raise the rate if they have trouble   
   > > selling federal debt.  There is no sign of that happening.   
   >   
   > Governments in Canada, including BC, Ontario and Quebec, as well   
   > as many cities like Toronto and Vancouver haven't been able to   
   > raise money at all.   
      
   There is (basically) no such thing as municiple bonds in Canada (unlike   
   the US).  Cities in Canada don't raise money by selling municiple bonds   
   (I wish they did, because that's what I'd be buying).   
      
   > Ottawa survises only because it can create money.   
      
   Ottawa creates IOU's which it then sells in return for real cash.  If   
   nobody wants to buy those IOU's, then Ottawa must increase the interest   
   rate for them until they all get sold.  So far, they haven't had to   
   increase the rates to sell what they need.   
      
   > > The BofC is under extreme pressure to *not* raise rates because   
   > > that will increase the value of the CDN dollar with respest to   
   > > the US dollar.   
   >   
   > And if the CDN falls with the USD say 50%, your next litre of   
   > gaoline might be $2.   
      
   The BofC would love to see the CDN fall to 75 cents US.  Exporters of   
   ALL types (commodities, oil, finished goods) would also love to see   
   that.   
      
   If it fell any further, the BofC would raise interest rates, or maybe   
   even buy up CDN dollars in the forex market by selling USD.   
      
   > Bet your wages don't keep up.  Further, want anything like   
   > steel, rubber, bananas, coffee, they all too will double.   
      
   The price of most things would not rise, because there's too many other   
   costs (refining, transport, middle-market vendors) that already account   
   for a good deal of the costs of what the consumer pays, and those are   
   already priced in terms of the CDN dollar.   
      
   If the CDN dollar were to fall overnight to 50 cents US, the most likely   
   the reason would be a crash of oil prices down to $20 USD.  We'd then be   
   paying 60 or 70 cents a liter at the pump as a result -  not a buck as   
   is the current price.   
      
   > > Other countries and other currencies are in no stronger   
   > > position to take any sort of lead.  That's the fallacy   
   > > of your argument.   
   >   
   > Actually not, look at Brazil in the last year.   
      
   Brazil is a third-world peon of a country.  The value of it's currency   
   has zero effect on global geo-politics or geo-economics.   
      
   > > The spending habbits of US consumers are becoming increasingly   
   > > unpredictable as this recession drags on, and you can't predict   
   > > inflation next year until we stop talking about deflation.   
   >   
   > Yes, and as that newly created money hits the streets it becomes   
   > inflationary.   
      
   Give me a call when you see that happening.  So far it's not.   
      
   > Oil will go right past $150/barrel onit's next wild swing.   
   > Supply is shrinking,   
      
   Do you know what's happening to oil right now?   
      
   Do you know how many oil tankers are tied up just off shore, all over   
   the world, going nowhere?  Just sitting there storing oil?  Tankers are   
   being rented by hedge funds just like the huge oil storage tanks were   
   being used to store oil by hedge funds in Cushing Olkahoma as oil was   
   reaching ridiculous levels.  New tanks were being built left and right.   
      
   Google for stories about oil tankers being tied-up off shore, just   
   sitting there holding oil.  There is a huge amount of supply, and when   
   someone gets sufficiently nervous and decides to sell, then they'll all   
   sell and oil will crash.  Probably soon after US thanksgiving.   
      
   --- SoupGate-Win32 v1.05   
    * Origin: you cannot sedate... all the things you hate (1:229/2)