Turkey Pluckings Rise; It’s China Stupid

Turkey Pluckings Rise

Given the results of negative interest rate policies have ranged from no benefit to outright disastrous, one might think that such policies would be abandoned.

However, demand for alleged expertise in failed strategies is at a new all-time high.

In a turkey-plucking,grasping at straws maneuver, the Bank of Canada Taps Fed for Deputy Versed in Oil, Negative Rates.

The Bank of Canada plucked a researcher from the Federal Reserve Bank of San Francisco to help it navigate record-low interest rates and the lingering effects of a commodity shock.

Sylvain Leduc, currently a vice president at the San Francisco Fed, becomes the Canadian central bank’s newest policy maker starting May 2. The Montreal-born economist, 46, has published a string of papers in the last decade on subjects including the benefits of infrastructure spending, the links between exchange-rate swings and inflation, and extraordinary monetary policy.

Governor Stephen Poloz is seeking to deepen the central bank’s research as it tries to get a better handle on why Canada’s economy has struggled to grow despite interest rates at historical lows, and had been looking at francophone candidates strong in economic modeling. Among Leduc’s first tasks will be to shed light on why an export recovery has failed to materialize, even with a depreciating currency and gathering U.S. growth.

It’s China Stupid

I have no idea how much the Bank of Canada paid (overpaid) for a plucked turkey, but the experts on negative interest rates and competitive currency devaluations have all been wrong.

In a nutshell, the idea that one can devalue themselves to prosperity is flawed from the start. The more obvious answer is “It’s China Stupid”.

Canada is a big exporter of commodities. But China is rebalancing away from commodity-intensive growth to consumer-led growth. Even if China half-heartedly rebalances, commodity exporters will struggle.