Canadian dollar

[Olaf Fub]

What about the Euro?

If the europeans did it, I dont see why the ALENA members cant do it. Theres already talks about it, but it takes the democrats in the US for the project to move on.

There is not a single US Politician that is pushing for this. The Democrats control Congress and none of them have made this an issue.

The Europeans adopted the Euro and formed the EU in an attempt to compete with the US. There is no US incentive to create a North American currency.

 

[Resolute]

Secondly, even if the dollar were to go above the US dollar, it would eventually go down due to the lack of trade and business Canada will have with other countries, and also tourism would go down, which would cause the GDP to slow down, causing the dollar to fall.

Naturally. It will suck having all of this oil and nobody to trade with because of the dollar.

 

[william_adams]

Naturally. It will suck having all of this oil and nobody to trade with because of the dollar.

what would suck even more is if the more than plentiful supply of cheap and high grade oil is made more readily available than our expensive low-grade stuff... Booms do tend to come with busts in the resource world...

 

[discostu]

Guys, keep the partisan politics out of this discussion. No discussing what the implications of whatever politician in power will have on the dollar or exchange rate.

 

[GSC2k2*]

what would suck even more is if the more than plentiful supply of cheap and high grade oil is made more readily available than our expensive low-grade stuff... Booms do tend to come with busts in the resource world...

You are 100% correct, but I guarantee you that some of our western friends on this board would take issue with you. Apparently this boom is forever.

 

[Fugu]

The more important point is the question asked by the original poster has been answered. Is there a point this thread any longer?

 

[FireMelnyk]

The next CBA will use the Amero once the North American Union that is currently being formed is completed.

 

[DevilsFan1973]

More on this in today's Globe and Mail:

Finance rejects common currency
Adoption of a North American dollar would erode monetary sovereignty, department briefing says

http://www.reportonbusiness.com/servlet/story/RTGAM.20070709.wrdollar09/BNStory/robNews/home

 

[Big#D]

Canadian player playing on a Canadian team pays Canadian income tax.
American playing on an Amercian team pays American income tax I assume.

Canadian player playing on an American team pays what income tax?

American player playing on a Canadian team pays what income tax?

Canadian players playing in the US would be required to pay US payroll taxes and file an American tax return. They would not be obliged to pay taxes in Canada if they can deem themselves to be non-resident in Canada. Residency requirements (as determined by CRA) are dependant on an individuals ties to Canada and include such things as the number of days spent in Canada per year, whether or not they have property in Canada (home, bank accounts, investments, etc.), and other personal ties to the country (e.g. - if the individual's spouse lives in Canada, etc.). If they are deemed a resident of Canada, they are required to file a Canadian tax return and pay the difference between the taxes they should pay as a Canadian resident and what they have already paid to foreign governments (i.e. - the US government via the IRS)

As for American players playing in Canada, they would be required to pay Canadian payroll taxes as they earn their salary. They would have to go through the same residency questions above to determine whether or not they are considered a Canadian resident for tax purposes. If they are, they must file a Canadian tax return. As for requirement to file an American tax returns, I'm not 100% sure. I'm not an expert on US taxes (not that I'm an expert on Canadian taxes either but I do have more knowledge in that area). The tax situation would depend on the tax treaty between the two countries. I know that I had American coworkers that had to file taxes in the US when they were living abroad. I think that they said that they had to file US tax returns regardless of where they lived because they were American citizens. I had this discussion because I didn't have to file a Canadian return as a Canadian citizen because I was deemed not resident of Canada at the time and didn't file a Canadian tax return. So take the information for what it is worth.

 

[Big#D]

Adoption of a North American dollar would erode monetary sovereignty, department briefing says

I would agree with the notion that Canada joining the US in a common currency would not be in its best interests. It would be much more difficult to change the direction of the economy if the currencies were linked. A common currency would require Canada to also have a common interest rate policy and eventually a similar tax regime to stay competitive. Political interests in Canada would not allow for a similar tax regimes with the US because that would almost certainly call an end to Canada's prized social system and Canadians would never go for that.

In my opinion, if Canada had to join a common currency, they would be better off joining the Euro as their economy is not linked closely to those countries to such an extent that it would hurt the economy. It might actually help break down barriers in trade between Canada and the EU countries.

In any case, don't expect a common North American currency any time soon. A single world currency is probably as likely as one in North America.

 

[PhillyPhantic]

In my opinion, if Canada had to join a common currency, they would be better off joining the Euro as their economy is not linked closely to those countries to such an extent that it would hurt the economy. It might actually help break down barriers in trade between Canada and the EU countries.

Uhmm, no... actually economic integration and currency optimal area goes hand in hand. It would actually benefit the economy of both countries if they were highly economically defendant of each other by forming a currency union. It is only when economies goes out sync (say unemployment rate differences, real interest rate differences) that a common currency can hurt either countries.

Just as a back ground reference, basically EU countries had to give up control of their currency to Brussels. By accepting the Euro they've agreed to not running government deficits above a certain level of their GDP and forever not able to change their interest rate unilaterally.

There are actually quite a few research about the dollarization of Canada and most agree that the economic benefits might be bigger than the social benefits that are lost. However, because most of the benefits of a common currency is going to be trade related (e.g. US firms buying Canadian input or vice versa), the same effects can be achieved by setting up a fixed exchange rate.

I won't bore you with the mathematics but it's quite feasible that we'll see more economic integration between Canada and the US in the near future.

 

[Fugu]

Uhmm, no... actually economic integration and currency optimal area goes hand in hand. It would actually benefit the economy of both countries if they were highly economically defendant of each other by forming a currency union. It is only when economies goes out sync (say unemployment rate differences, real interest rate differences) that a common currency can hurt either countries.

Just as a back ground reference, basically EU countries had to give up control of their currency to Brussels. By accepting the Euro they've agreed to not running government deficits above a certain level of their GDP and forever not able to change their interest rate unilaterally.

There are actually quite a few research about the dollarization of Canada and most agree that the economic benefits might be bigger than the social benefits that are lost. However, because most of the benefits of a common currency is going to be trade related (e.g. US firms buying Canadian input or vice versa), the same effects can be achieved by setting up a fixed exchange rate.

I won't bore you with the mathematics but it's quite feasible that we'll see more economic integration between Canada and the US in the near future.

People on this board bored with numbers? Come on, you've come to nerd central.

You might expand on the point of what EU countries have to do to guarantee that interest rates and deficits stay within the accepted ranges.

On the US and Canada front, I might add that the sheer size of the US economy (still the world's biggest) does put Canada at a bit of a disadvantage as far as being able to influence economic momentum.

 

[PhillyPhantic]

People on this board bored with numbers? Come on, you've come to nerd central.

You might expand on the point of what EU countries have to do to guarantee that interest rates and deficits stay within the accepted ranges.

Well, the reason that Eurozone members must show fiscal restraint (i.e. not running deficit above 6% of GDP) is because of the goal of ECB (European Central Bank) is to control inflation period. This is really due to the notion of Goldilocks Economy where the so-called optimal nominal inflation rate should be around 2%.

When governments run high deficits, one of few things must happen. They must increase revenue i.e. increase taxes, they must borrow i.e. issue bonds, or they can print more money i.e. devalue their currency. So besides increase taxes, all of the other measures impacts the nominal interest rate very substantially. By restraining the hands of government to run deficits, EU members would be less tempted to tamper with the currency.

It is impossible for one country to control the interest rate in a currency union even if there are great benefits for it to do so. In a very simple but effective example, say A, B, C are all in a currency union, and similar to the ECB A, B, C all gets to vote on the nominal interest rate by a simple majority. Say country A experinces abnormal economic shocks (disaster, sharp rise in unemployment, big drop off in productivity advantage). Now one of the sensible things the central bank of country A might do when it's not in a currency union is to lower the interest rates to counter act economic downturns. However, say that country B and C are all experiencing inflationary pressures (rising wages, higher consumer prices, etc), by agreeing to raise the interest rate to appease country A would put country B and C between a rock and a hard place.

Of course we have not seen this in the EU yet. Doesn't mean it can't happen. The Euro is still something that works practically but not theoretically. (That doesn't mean that theory isn't right, it just means that the stars are currently aligned correctly for the Eurozone).

There are very convincing macro papers written that says if Michigan can issue it's own currency for the last ten years it would've been a lot better off.

 

[Fugu]

Well, the reason that Eurozone members must show fiscal restraint (i.e. not running deficit above 6% of GDP) is because of the goal of ECB (European Central Bank) is to control inflation period. This is really due to the notion of Goldilocks Economy where the so-called optimal nominal inflation rate should be around 2%.

When governments run high deficits, one of few things must happen. They must increase revenue i.e. increase taxes, they must borrow i.e. issue bonds, or they can print more money i.e. devalue their currency. So besides increase taxes, all of the other measures impacts the nominal interest rate very substantially. By restraining the hands of government to run deficits, EU members would be less tempted to tamper with the currency.

It is impossible for one country to control the interest rate in a currency union even if there are great benefits for it to do so. In a very simple but effective example, say A, B, C are all in a currency union, and similar to the ECB A, B, C all gets to vote on the nominal interest rate by a simple majority. Say country A experinces abnormal economic shocks (disaster, sharp rise in unemployment, big drop off in productivity advantage). Now one of the sensible things the central bank of country A might do when it's not in a currency union is to lower the interest rates to counter act economic downturns. However, say that country B and C are all experiencing inflationary pressures (rising wages, higher consumer prices, etc), by agreeing to raise the interest rate to appease country A would put country B and C between a rock and a hard place.

Of course we have not seen this in the EU yet. Doesn't mean it can't happen. The Euro is still something that works practically but not theoretically. (That doesn't mean that theory isn't right, it just means that the stars are currently aligned correctly for the Eurozone).

There are very convincing macro papers written that says if Michigan can issue it's own currency for the last ten years it would've been a lot better off.

Welcome to the Business Board.

As for Michigan, there are those times when belonging to a union seems to help, and I guess in this case... maybe not. I liked your examples, btw.

 

[Big#D]

Uhmm, no... actually economic integration and currency optimal area goes hand in hand. It would actually benefit the economy of both countries if they were highly economically defendant of each other by forming a currency union. It is only when economies goes out sync (say unemployment rate differences, real interest rate differences) that a common currency can hurt either countries.

Just as a back ground reference, basically EU countries had to give up control of their currency to Brussels. By accepting the Euro they've agreed to not running government deficits above a certain level of their GDP and forever not able to change their interest rate unilaterally.

There are actually quite a few research about the dollarization of Canada and most agree that the economic benefits might be bigger than the social benefits that are lost. However, because most of the benefits of a common currency is going to be trade related (e.g. US firms buying Canadian input or vice versa), the same effects can be achieved by setting up a fixed exchange rate.

I won't bore you with the mathematics but it's quite feasible that we'll see more economic integration between Canada and the US in the near future.

Actually, I'm quite aware of the economic arguments for economic integration within North America. As I stated above, however, it will not happen because of the politics of the matter. For a currency union, countries cannot soley link their currencies without significant potential problems to their economies unless they also integrate their interest rate and taxation policies, amongst others. This is not likely to happen because it would mean Canada moving towards the US interest rate and taxation policies (and as I stated above, it is very unlikely for Canadians to go for the US taxation structure at the expense of some of their social welfare structures - health, education, etc.).

For a currency union to work properly, countries must integrate their economies first before a currency union becomes feasible. Canada and the US are not nearly integrated enough to even contemplate a currency union at this time. It may be feasible that we'll see more economic integration between Canada and the US in the future but it is unlikely to happen in the near to medium future.