Wednesday, June 1, 2011

The Canadian Dollar is No Haven from a US Dollar Collapse

We spend a lot of time here at The Dol­lar Vig­i­lante chastis­ing Ben Bernanke and the Fed­eral Reserve and prepar­ing our sub­scribers for a col­lapse of the US dol­lar – some­thing which has been pay­ing off very hand­somely, with gold and sil­ver at record highs this year – but don’t take that to mean that we pre­fer any other fiat cur­rency. No fiat cur­rency in the west­ern world is any bet­ter than the US Dol­lar. In fact, in every case, they are worse.

The Fed­eral Reserve is still, despite its secrecy, one of the most trans­par­ent cen­tral banks in the world. It also has, over the last cen­tury, despite inflat­ing the dol­lar down­ward by 97%, been one of the least infla­tion­ary banks.

We often hear of peo­ple denounce the US dol­lar and cor­rectly divine that it is headed to worth­less­ness, but, in the same breath, they say they own other fiat cur­ren­cies like the Cana­dian dollar.

This is a case of igno­rance of the work­ings of banks like the Bank of Canada – or vir­tu­ally any other major cen­tral bank in the world, for that matter.

There are numer­ous rea­sons why the Cana­dian dol­lar will not sur­vive a US dol­lar collapse:

  • The Cana­dian econ­omy is very tied to the US economy
  • The Cana­dian Gov­ern­ment is intent on devalu­ing the Cana­dian dol­lar along­side the US
  • The Bank of Canada has vir­tu­ally no gold back­ing the Cana­dian dollar
  • All that does back the Cana­dian dol­lar is the US dol­lar and other fiat currencies
  • The Cana­dian dol­lar is not used globally (read more)