Liberal Power Grab -- What did it cost us?

[dd74]

The only problem I have with Canada is that wide-ass bacon they eat.

[fintstone]

The only problem I have is that some Canadians encourage young troops who volunteered to join the military...and swore the oath..to desert. They should be ashamed to exploit the weakness of these men and subsequently ruin their lives...for political purposes.

[jyl]

Fint, I'm simply pointing out the value of the CDN makes a major difference to a lot of things.

The US imported $222 billion of goods and services from Canada, and exported $170 billion to Canada, in 2003. http://www.census.gov/foreign-trade/balance/c1220.html#2004

Canada is our largest trading partner, by far. Followed by Mexico, China and Japan. http://www.census.gov/foreign-trade/statistics/highlights/top/top0408.html#total

The trade between the countries is mostly agricultural (livestock, fruit, vegetables, grains), timber materials (wood, pulp, paper), and minerals/metals (alumina, copper, etc - also recycled metals) and energy (oil, natural gas, electricity, coal).

So, you asked: "Once again...why would the US care if the Canadian dollar rises in respect to the US dollar? Are you afraid the Canadians will buy more goods from the United States..increasing jobs in the US and causing a balance of trade in our favor? Sounds terrible to me. LOL..."

A fall in the USD relative to the CDN will show up as higher prices paid by US consumers and companies for Canadian products. People will feel it in their energy bills, grocery bills, and so on. Companies will feel it in raw materials prices, which have already risen a lot due to Chinese demand. In other words, inflationary pressure and pressure on corporate profit margins. (If you think I'm making this up, check out the consumer products companies that have been reporting lower-than-expected profit margins due to energy and raw material inflation - PG, CL, KMB, and so on.)

Of course, as you point out, a falling USD will also encourage Canadians to buy US products which will effectively be cheaper for them. This will benefit certain US industries, like agribusiness. Whether those industries are large employers, I don't know.

Canada is also a pretty large investor in the US, but as far as I know they don't buy that much of our government debt.

In general, the US government would probably like to see the USD fall against other currencies, to stimulate US exports. The tradeoff is inflationary pressure in the US, and pressure on consumer spending. The more worrisome thing would be if a falling USD affected the funding of our government debt by the Chinese and Japanese.