What Would Happen To Canada If They Adopted The U.S Dollar ?

[SirJosephPorter]

Interesting. The Central African CFA Franc is similar to the Eurp in that it is shared by a number of countries. It just makes sense in a shrinking world.

There are definite advantages in several countries having a shared currency. It makes trade, tourism etc. easier; it eliminates some red tape and flow of goods, information become easier, smoother.

However, that is different from one country unilaterally adopting the currency of another country. In this respect, it is important to note that when EEC counties decided on a common currency, they did not adopt Guilder (Netherlands), Mark (Germany) or Schilling (Austria); they came up with a totally new currency, the Euro.

 

[Machjo]

There are definite advantages in several countries having a shared currency. It makes trade, tourism etc. easier; it eliminates some red tape and flow of goods, information become easier, smoother.

However, that is different from one country unilaterally adopting the currency of another country. In this respect, it is important to note that when EEC counties decided on a common currency, they did not adopt Guilder (Netherlands), Mark (Germany) or Schilling (Austria); they came up with a totally new currency, the Euro.

That's something I could go for. in fact, why isn't Canada pushing to share a common currency with another country or other countries? In fact, as a short-to-medium-term solution, why not look at adopting the Euro?

 

[wulfie68]

In my mind the biggest reason we won't adopt the Euro is as SirJoe stated above:

Adopting US dollar will mean that Canada gives up control on Canada's fiscal policy, economic policy. Canada will no longer have control over its currency. Usually when a currency is sliding, government may take steps to shore it up, when it is too strong, government may take steps to bring it down (like lowering interest rates etc.). These options will no longer be available.

How would that be any different by inserting Euro for USD? We'd be a minority partner at best, compared to the rest of the EU, and while its not as monolithic (different countries will have differing agendas/ideas on fiscal policy) as a partnership with the US would be, its farther removed in terms of its area of interest. Given our economic ties, we ARE more closely related to the US than the EU, so it wouldn't make as much sense, to adopt the Euro if we were looking to give up our national currency.

It would be kind of ironic though to see Canada converting to the Euro while the UK still used the pound

 

[Machjo]

In my mind the biggest reason we won't adopt the Euro is as SirJoe stated above:



How would that be any different by inserting Euro for USD? We'd be a minority partner at best, compared to the rest of the EU, and while its not as monolithic (different countries will have differing agendas/ideas on fiscal policy) as a partnership with the US would be, its farther removed in terms of its area of interest. Given our economic ties, we ARE more closely related to the US than the EU, so it wouldn't make as much sense, to adopt the Euro if we were looking to give up our national currency.

It would be kind of ironic though to see Canada converting to the Euro while the UK still used the pound

The UK chose to keep the pound mainly for symbolic reasons. From a strictly economic standpoint, it would make sense for the UK to adopt the Euro as it would eliminate currency exchanges in trade between the UK and the EU.

As for Canada adopting the Euro, it's quite different from what you mentioned above in that in the case of the EU, no single country controls it entirely, while all member countries have an equal say, unlike if Canada adopted the US dollar. It's strange too that you quote SJP, seeing that a few posts down, SJP supports sharing a common currency too, just as long as it's not one country dominating it.

Also, while it is true that Canada's trade with the US is far greater than with the EU, for Canada to adopt the Euro would in no wise hurt trade between Canada and the US. Honestly, what would be the difference whether the US must trade in US dollars for Canadian or for Euros? Either way it woud have to trade a currency. Of course ideally we'd want a common world currency not dominated by any one country, but controlled equally by all countries. Until that happens, however, regional currencies are a good start. And while Canada's adopting the Euro would neither benefit nor harm relations between Canada and the US, it would benefit relations between Canada and the EU, and so indirectly, between the US and the EU too, through Canada. Looking at it that way, there would be a net gain for all concerned.

 

[Toro]

It's a bad idea.

So if you are looking for themes for your paper, it is this -

In a monetary union, the benefits of the union must be outweighed by the costs.

These are the benefits:
- it reduces uncertainty for exporters. With 40% of the country reliant on exports to the US, it would provide cost certainty and reduce volatility in the real economy
- it reduces costs because there is a cost with trading currencies that gets vacuumed up by the banks.

These are the costs:
- without a political union, it can put pressure on the real economy if Canada is in a recession and America is not. Canada will have to import American interest rates, which should be lower in Canada if Canada is in a recession and America is not. Canada has a political union between the provinces. When one province, say Alberta, is in a boom and another, say Nova Scotia is in a recession, political union allows for a valve to release the pressure on the economy from a common interest rate. In Canada, workers can move (almost) freely from province to province, so unemployed Nova Scotians can go to Alberta. The government will also transfer funds from Alberta to Nova Scotia. There would be no such political arrangement between Canada and the US.
- Canada would lose sovereignty by giving up its ability to set interest rates and issue its own currency.

I think the costs outweigh the benefits and a monetary union should not be pursued with the US.

 

[Nuggler]

actually dummy....as of last night the Canadian dollar was a hair over .9

Don't expect to much of Sir Joe.

Gettin older

Feeble

Minded

Go easy on the old fart

:lol:

 

[Machjo]

It's a bad idea.

So if you are looking for themes for your paper, it is this -

In a monetary union, the benefits of the union must be outweighed by the costs.

These are the benefits:
- it reduces uncertainty for exporters. With 40% of the country reliant on exports to the US, it would provide cost certainty and reduce volatility in the real economy
- it reduces costs because there is a cost with trading currencies that gets vacuumed up by the banks.

These are the costs:
- without a political union, it can put pressure on the real economy if Canada is in a recession and America is not. Canada will have to import American interest rates, which should be lower in Canada if Canada is in a recession and America is not. Canada has a political union between the provinces. When one province, say Alberta, is in a boom and another, say Nova Scotia is in a recession, political union allows for a valve to release the pressure on the economy from a common interest rate. In Canada, workers can move (almost) freely from province to province, so unemployed Nova Scotians can go to Alberta. The government will also transfer funds from Alberta to Nova Scotia. There would be no such political arrangement between Canada and the US.
- Canada would lose sovereignty by giving up its ability to set interest rates and issue its own currency.

I think the costs outweigh the benefits and a monetary union should not be pursued with the US.

I think the benefits would outweigh the costs even if it were nothing more than a monetary union. Also, it would not be a question of Canada adopting US interest rates if were were to adopt a new common neutral currency; it would be, rather, the new central bank taking the whole Canada-US economy into account when adjusting interest rates. So the US would lose some of its sovereignty too.

And just a point about sovereignty; it's not sacrosanct. There are in fact advantages to giving up some sovereignty. Imagine if we all refused to give u some of our sovereignty! We'd all be living in city states. Could you imagine having to apply for a visa every time you wanted to travel from Victoria to Vancouver, or Ottawa to Toronto?!

As for your other points, I do believe that the advantages of a monetary union could be more fully exploited through freer movement of labour. In fact, we'd have that if we joined the EU.

And like I'd mentioned before, what says that Canada can pursue a monetary union with the US only? if the US proved uninterested, there'd be nothing stopping Canada from sharing a common currency with another nation. And I can add to that that such a union would not necessarily have to hurt Canada-US ties either. After all, we're not sharing a common currency as it is, so it's not like we'd be abandoning a common shared currency with the US to join another monetary union. We'd simply be joining another monetary union while still not having a common currency with the US. In that respect, not much would change in Canada's relations with the US. In fact, if anything, a common monetary union between Canada and another nation would help to bring the US closer to that nation too owing to the relationship between Canada and the US.

 

[Toro]

The United States is not interested in the free movement of labour across borders.

And the US will never, ever give up its monetary sovereignty. If there is a common central bank, it will be based in Washington, and it will be called "The Federal Reserve," and it will be answerable only to the United States Congress.

 

[Machjo]

As an aside, Canada's joining the EU would likely help Canadian unity! Let's think about this for a moment. The EU has already established common education standards for many trades and professions,something Canadian provinces have so far failed to do. A union with the EU would likely expect Canadian provincial ministries of education to consult not only with other EU ministries of education to establish various educational standards for various trades and professions, but with other Canadian provicnes too, something successive federal governments have thus far failed to do, mainly owing to an archaic constitution.

After all, many EU constitutions are relatively new. The German, Spanish, Italian, and Greek ones stem from after WWII. The British one, though old, stems from a centralised monarchist and later imperialist system. This centralizatoin allowed the UK to be able to negotiate efficiently with other nations. France's is similar.

Canada's, on the other hand, was really an incremental step towards fusing separate British colonies into a new Dominion, an incremental step that has never been proceded by a second, except for the Charer of Rights and Freedoms, but that still never touched upon an archac division of responsibilities between governments.

A union with the EU would likely put pressure on Canadian Ministries of Education to start working together to establish common EU-wide standards and so, by implication, common Canadian standards too for various trades and professions, thus allowing for freer movement of labour not ony across the EU, but even between Canadian provinces.

 

[Machjo]

Not to mention that while Europeans have EU-wide health coverage, Canadians only have province-wide health coverage. Imagine that.

 

[Machjo]

The United States is not interested in the free movement of labour across borders.

And the US will never, ever give up its monetary sovereignty. If there is a common central bank, it will be based in Washington, and it will be called "The Federal Reserve," and it will be answerable only to the United States Congress.

So what would be stopping Canada from adopting the euro? While such a step would help to bring Canada closer to the EU, it woud do nothing to harm Canada-US relations. In fact, it might even help to develop closer ties between the US and the EU too wihtout hurting relations with Canada. A plus all-round.

We need to stop thinking of ourselves as puppets of the US, who can't do anything unless the US is invovled. Of course we can be proactive in developing ties with other countries independently of the US.

 

[Toro]

Canada shouldn't adopt the euro because the economies are not integrated. That would be far, far worse than adopting the dollar. At least with the dollar, there are economic arguments for entering a monetary union with the US. There are none with the euro.

Canada should not adopt anybody else's currency. The monetary authorities in Canada have done a very good job at preserving the value of the loonie. Canadians should be proud at the strength of their currency.

 

[ironsides]

Hopping to get long answers or sites sources ....... I have a write-up that has to be done tonight and passed in tomorrow .. so I'm looking for idea's .. THANKS !

If anyone is really interested in what is and has happened to out economies read this book. Sure answers a lot of the why's of what is and has happened.

The Creature from Jekyll Island: A Lecture on the Federal Reserve "G. Edward Griffin exposes the most blatant scam of all history. It’s all here: the cause of wars, boom-bust cycles, inflation, depression, prosperity.

YouTube - G. Edward Griffin TRASHES the FED - 7.12 '08


Ever wonder why just about all countries based their currency upon the U.S. dollar? The U.S. was the only country who's dollar was not backed by gold.

 

[taxslave]

Perhaps a common world currency? I don't know enough about the finer workings of currency trading but it would seem to me that as an exporting economy it would be convenient to have a world price and not have to translate it into various different coins. The way it works now people who contribute nothing to the economy can make or loose money simply by trading currencies. ANd sometimes they cause serious problems for the real economy by doing this.

 

[Machjo]

Perhaps a common world currency? I don't know enough about the finer workings of currency trading but it would seem to me that as an exporting economy it would be convenient to have a world price and not have to translate it into various different coins. The way it works now people who contribute nothing to the economy can make or loose money simply by trading currencies. ANd sometimes they cause serious problems for the real economy by doing this.

I'd be all for this as long as it is in fact a world currency shared by all and not just one nation's currency imposed on all other countries.

 

[Machjo]

And I fully agree with the other point Taxslave brought up about currency brokers essentially functioning as a parasite in the money markets by producing neither product nor service to the economy yet skimming money off the top in each intr-currency transaction.

Now don't misunderstand me here. Certainly as long as we have more than one currency, we need these currency brokers, so to that extent, the existence of currency brokers is not through any fault of their own, but rather trhough incompetence on the part of world governments in being able to agree on a common currency.

And as for those concerned about developing countries, this would also help to stabilize their currencies too, thus helping them to develop.