INFLATION FOR NEXT THREE YEARS

What do you is gonna happen in the next three years and what indicators do you think there are? What about in Europe?

ttt

could you rephrase the question?

My financial planner said he thinks the American economy is going to suffer more and that theit dollar will be worth less than the Canadian within 5 years.

Chesty, he's Canadian, isn't he?

I would say inflation will be constant, as it is the only thing Bernanke believes in. The Fed will only move to stabilize inflation, not cool/heat the economy. It will stay in the 1.5% to 3.5% band, with the upper band being less likely.

Happened once and it will happen again. Remember what happened between WW1 and WW2.

Right now we're in between a major war so break out your survival kits and learn how to work with your hands cuz when the shit hits the fan your 3 peice suit and RRSP's will do ya no good.

He is Canadian

For some reason all Canadian economists and finance people I've met have an unhealthy obsession with the USD-CAN$ exchange rate. Back before the Euro the French were just as particular about the Frank FX rate.

"Happened once and it will happen again" - And what exactly do you base this statement on? Will the Great Chicago Fire happen again? Will the Mongols invade Russia again? Brilliant!

Actually he was saying that it's based on the fact that Americans (the government anyway) are spending a LOT more than they are bringing in because of the war in Iraq.  You're getting deeper and deeper in debt with no end in sight for the war.

The funny thing is that US debt as a ratio of the GDP is lower then EU or Canada. But to address your point, the debt of a nation has very little to do with currency movements. Take the Yen as an example. The dollar is fairly high compared to the Yen, but is sliding against the Euro.

Is Japan paying for a war? No. If fact their economy is finally climbing out of a nasty period, but the Yen is falling. So why is that happening?

Another thing that people tend to forget is that an undervalued currency combined with low inflation is beneficial for an economy. Local production prices stay constant, while exporting becomes much easier.

Now we can get into a comodity pricing discussion, which IMO effects USD movements a lot, but that gets much more complex.

The Canadian dollar will keep flying high because Canada has a lot of resources, oil etc to trade. Secondly, the Canadian economy is red hot, with low inflation (around 2%), low unemployment, government debt decreasing. The government has been running surpluses for many years now.

Canadian dollar will definitely stay high, but I do not think it will overtake the US currency. If the US economy tanks, so will the Canadian.

Canadian-US exchange rate importance: Canada does 80% of its trade with the US, while I think Canada is either #1 or #2 biggest trading partner to the US. China may have overtaken.

I know next to nothing about this sort of thing, I am just relaying information that my financial provider gave me. 

I actually hope the American dollar stays higher than the Canadian, because my boyfriend is an actor and they don't make movies in Canada if the dollar is too high.

you're a fool if you believe the fed's inflation numbers.

lol.

Find a new Financial Planner. Seriously. kot1k just owned him in 3 paragraphs.

Most US financial indicators are positive, or more positive than most of the other large global economies.

Mark

"Find a new Financial Planner."

lol. Any financial planner that start telling you about exchange rates is a littel suspect to say the least. For an individual the exchange rates don't really matter unless you are exposed somehow.

He may be a fine planner, but he should stick to tax allocations and estate planning instead of showing off to his clients about his macro knowledge.

JonnySak, you would have a chance of being correct if it wasn't for one big if...that most large banks employ teams of economists that gather their own indicators and measure inflation independantly of Fed reports. In fact, it's something that's fairly easy to measure...the only snag is getting the data. If you had the time, I'm sure you could get your very own inflation measurements. It's really not complicated.

I know there are lots of people here that have an unhealthy obsession with the Fed, but with a bit of education, you will realize that it's not a scarry monster, but a fairly transparent organization with a ton of very smart people who, believe it or not, have the country's financial interest as their highest priority.

He is financial planner, he ain't no economist.

The floating exchange rate helps an economy by adjusting automatically when times are good or bad (think of exports and imports).

Strong currency does not always indicate a strong economy, obviously there are other factors. But Canada has both a strong currency and strong economy. Most economist see the Canadian dollar hovering around the 0.85 to 0.90 mark.