>I think that Linda McQuaig's argument was that if Canada's central bank
>had settled for a 3-4% inflation rate in the early 1990's, rather than
>striving for zero inflation, the economy would have been in a stronger
>position.That the benefits of this zero inflation policy went to holders of
>wealth, and the costs (higher interest rates, slower growth, increased
>interest costs on the national debt, appreciation of the dollar, higher
>unemployment leading to increased social spending and a decrease in
>tax revenue) were high. And even though the recession in the US at the time
>would have had an effect on Canada, it's recession would have been milder.
But Canada has some serious fundamental problems, no? It has some major MNCs, but it's technologically dependent on the U.S., and excessively reliant on primary commodities. Real sector problems like that manifest themselves in current account deficits, a declining currency, and high indebtedness (domestic and foreign). The BoC perversely tries to cure these problems through tightness, yes, but the problems are still there.
Doug