• Michael makes a strong argument for planning petro development. Of course that was what the FTA was about, planning to ship oil and gas to the U.S. without federal government interference, allowing Americn demand to determine the rate of exploitation of Canadian resources.
    What the Bank has not addressed is the deflationary impact of the rising dollar. Why are import prices not coming down? We need some kind of watchdog on import prices. Book prices, wine prices, lots of manufacturing imports, the currency appreciation dividend is being treated as a windfall gain. Domestic prices of export goods are probably going up by even more than the currency appreciation, and need to be watched as well.

  • Michael also scores points on the topic of the lack of public infrastructure being a factor behind regional inflation. Instead of diverting a growing share of the oil wealth into investing growth outside of the oil sector, Alberta is just giving the money back to people in lower tax rates. And that just increases prices of consumer goods and real estate. The big lesson here is that public infrastructure and progressive taxation serve as an excellent buffer to the boom and bust of the private sector, and the less of a buffer you have, the more that becomes a factor in monetary policy. Which brings us to Dodge; why is he so silent on the need for left-wing initiatives that stabilize inflation? I’m sure we all know the answer to that. The governor of the Bank of Canada is not “independent” so much as he is simply right wing under a right wing government, as has been the case with his predecessors. Now if only we can get the voting public excited about monetary policy, this could become an election issue. But I think somehow that’s not about to happen.

  • It’s not just Mendelson making this point. I was pleasantly surprised to read the Globe’s lead editorial yesterday suggesting higher royalties as a solution to Alberta’s inflation.

  • Because Alberta still uses the Canadian dollar.

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