What’s Going on with the Bank of Canada’s Assets?

It looks like the Bank of Canada is slowing the growth of the monetary base.

The Bank of Canada has been printing money like crazy in the last few years, beating up the dollar to artificially juice up exports, which supposedly, according to Keynesian-mercantilists like Poloz, stimulates the economy. (It doesn’t — it just means Canadians have to sell more stuff to buy the same amount of imports, which actually makes the country poorer.)

So a slowdown, or flattening, of the BoC’s frenzied asset buying is definitely a good thing. Especially as the American dollar is strengthening considerably.

South of the border, the Fed looks like it might be reversing its recent deflationary actions, where it had sold off a surprising 10% of its assets.

Maintaining the “boom” phase of the business cycle requires an ever-increasing rate of monetary expansion. So these actions will put huge strain on their respective economies.

It often takes about a year for the effects of monetary policy to really be felt throughout the system. If the stabilization path continues, then Canada will probably go into a recession later this year.

HAPPY NEW YEAR!