Comment 67685

By A Smith (anonymous) | Posted August 08, 2011 at 18:33:03

Canada's GDP is $1.7 Trillion dollars. Canada's dollar is $1.02 US.

Let's make the assumption that LRT is a total waste of money, with zero benefits to society at all.

If the Federal government sells the Bank of Canada $70 Billion in bonds to create LRT systems across Canada, there will be $70 Billion more dollars in money supply, but our GDP will remain at $1.7 trillion.

The result is a dilution of the purchasing power of the Canadian dollar by $70B/$1700B, or approximately 4%. If we factor that into our dollar in US terms, that gives us a dollar worth $0.98US.

So, by wasting money on LRT, the government will have diluted the value of our dollar. That's bad.

However, the upside of having a lower dollar, is that now our exports are cheaper for other countries to buy. The result will be more stuff being built here in Canada and less stuff being bought from China, etc. That means more jobs for Hamilton.

LRT may just be the manure our economy needs, to create the conditions for economic growth.

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