At least for now Canadian dollar doesn’t seem responsive to OPEC Oil Supply Management Deal with Russia – April 13, 2020,
The environmentalists in Canada have been pushing for Canada’s oil sands to be shut down, well if this does happen I hope they realize their standard of living will be in immediate jeopardy. This standard of living we take for granted in Canada revolves around our petrodollar, in the event, the Candian dollar is no longer viewed as a PetroDollar everything socialist law we have on the books will have to be financed via other means!
What a lot of people don’t understand is the power of being privileged to be able to go into debt. In many countries, only the upper tiers of society can take out loans, debt is actually supposed to be something targeted to producers of wealth, the industrious, consumer debt is a privilege richer countries are privileged to get via their productivity.
There’s a myth that is circulating that printing money solves all problems, well many people will be experiencing a wake-up call if the market comes to the realization that Canada is no longer an energy-producing powerhouse. Justin Trudeau has done everything in his power to appease the domestic and foreign special interest groups who want to shut down Western Canada.
Now, in UNIONIZED eastern Canada, there’s a belief that a lower loonie is a good thing for manufacturing, I like to point out that devalued currency creates a BRAIN DRAIN environment. Smart people, don’t have to devalue their worth to appease labour unions, doctors, nurses, engineers, architects, mechanics, truck drivers, can earn more with a stronger American currency and spend less with a lower American cost of living.
America’s most expensive Liberal States almost have the same cost of living of most Canadian provinces, this is one of the problems with Equalisation payments, the productive Western Provinces are financing the insolvent bloated governments in Eastern Canada, this is another reason why Eastern Canada has a very hard time retaining their SMARTEST young people.
Anyway, at least for today, the Canadian dollar isn’t reacting well to the higher price of oil, this could simply be because COVID-19 is lowering the supply of oil, but it could also be that investors are being more meticulous with their investments.
If investors are hoarding either their local currencies or U.S dollars, this a horrible sign for Central banks who think that they can simply prop-up asset prices and make things better. As I’ve stated over and over again, I do not think the world wants a return to a Gold Standard, the world likes the idea of a PETRO dollar, cash follows energy and if the oil markets on MainStreet are flat, that equates to REAL DEFLATION!
Even in the technological environment where money creation is basically clicking enter on a keyboard, it won’t stop the market from ignoring inflated asset prices! Canada prepare yourselves accordingly!
Canadian dollar weakens as oil prices shrug off output cut | theglobeandmail.com
Interesting times ahead!
