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Carney Says Intervention Needs Policy to Back It Up to Work

Posted by WARREN MOSLER on October 27th, 2009


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CIBC Says Canada Should Consider ‘Bounded Float’ of Currency

This would help support exports. (But my first choice would instead be funding an $8/hr job for anyone willing and able to work and a tax cut to sustain domestic demand and optimize real terms of trade.)

Carney Says Intervention Needs Policy to Back It Up to Work

Oct. 27 (Bloomberg) — Bank of Canada Governor Mark Carney said today that central banks that try to affect the level of their currencies through market actions need to back the transactions with monetary policy to be effective.

Speaking to lawmakers, Carney said the bank could use tools, including quantitative easing, to implement policy with

the bank’s key interest rate as low as it can go.

Selling your own currency is the back up to your other, export oriented policy.

There is no limit to the amount of your own currency you can sell into a bid at that level.

The (operational) limit is how much the rest of world wants to buy at your selling price.

Quantitative easing has nothing to do with this.


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7 Responses to “Carney Says Intervention Needs Policy to Back It Up to Work”

  1. Matt Franko Says:

    To Warrens oil price key: Canada is USA’s largest source of
    oil imports…makes USD easier to get in Canada.

    Why do they care that the “loonie” is up vs USD when they are cleaning our clock with the oil prices…nice “problem” to have…

    Reply

  2. JKH Says:

    more generally – this seems like quite a good write up of the basics:

    http://www.nakedcapitalism.com/2009/10/all-debt-is-not-created-equal-government-debt-is-not-the-same-as-private-debt.html

    Reply

  3. winterspeak Says:

    Nice to see PK end up on Yves site. But have you checked out the comments? Yikes!

    Reply

    JKH Reply:

    Have a look at the previous post to which Auerback was responding, if you dare. It’s a lot worse than yikes.

    Reply

    winterspeak Reply:

    Yikes indeed! What a load of hogwash (although I should be careful, it was language like that which just got me banned from EconLog. I should have followed my first instinct and left it alone after Arnold defeated me with his innumerate stories about fruit trees and, I kid you not, mackerel.)

    Good on Auerback, who clearly knows better, for being able to describe that crap as “otherwise thoughtful”. It is that kind of class that gets one on Naked Capitalism, while I just flail to no effect! ; )

    Reply

    JKH Reply:

    Banned from EconLog – a badge of honour perhaps.

    selise Reply:

    hey, we need all the help we can get! i’ve been told that ignorance is curable, and some of us are trying… p.s. thanks for your comments and attempts to help.

    Reply

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