Bank of Canada - why so austere?

[pms]

Just a few weeks ago I read how shocked everyone was because the England's
Central Bank didn't raise rates even though they've been threatening to do
so because they see a danger in a housing bubble.

Question:  they say Greenspan wants to keep the system flush with cash but
can't Canada's rate hike help attract cash from overseas?  If money is
flowing into "safe" guv Treasury bonds it seems Canadian bonds would look
very attractive.  And if that turned out to be the case, wouldn't the flow
of cash into C. Treasuries keep interest rates from rising too much? (here I
am back to my total non-understanding of how these two forces work on
interest rates.  sigh)  Like Canadian $ will be strengthened by cash flow
while US $ will be weakened by cash flow created out of thin air, no?
(reading too many goldbug/fiat money articles).  I read New Zealand bonds
were paying 9%.  Why wouldn't everyone be buying NZ bonds I wonder?

----- Original Message -----
From: Doug Henwood <dhenwood at panix.com>
To: lbo-talk <lbo-talk at lists.panix.com>
Sent: Tuesday, July 30, 2002 10:29 AM
Subject: Bank of Canada - why so austere?


> Canada's overnight rate stands at 2.75 percent while the
> corresponding U.S. federal funds rate is at 1.75 percent.
>
> Greenspan wants to keep the U.S. system flush with cash amid
> accounting scandals that have wiped billions off stock markets,
> casting new doubts on an already weak recovery. Most dealers expect
> the Fed to hold rates steady till next year.
>