Global demand boosted Canadian dollar: Greenspan
Published Tuesday, October 9, 2007 10:25AM EDT
International demand for Canada's raw materials and fuel is the main engine behind the high Canadian dollar, according to economic expert and former U.S. Federal Reserve Chairman Alan Greenspan.
Greenspan said that countries such as China and India have spurred the increase in the value of the loonie.
"It's essentially the result of globalization in the sense that there has been a very significant build-up in the developing world," Greenspan told CTV's Canada AM.
"These (countries) are, at their stage of economic development, major consumers of raw materials and fuel and Canada is an extraordinarily large producer of all of that."
As a result, Greenspan said that the prices of raw materials and fuel have gone up and have led exchange rates to rise. Greenspan said this process has led the Canadian dollar to reach parity with its American counterpart.
Acknowledging that the United States and Canada are "locked together" on economic issues, Greenspan also expressed concern about the increased number of retirees in both countries in the coming years.
Greenspan said the number of retirees will double in the next 25 years and will be hard to accommodate economically.
"I'm very concerned that the inability of our political system to address this extraordinarily difficult problem is a major problem for not only our economy but (Canada's) as well," Greenspan said.
Greenspan's concern for the American economy continues despite the fact he is no longer the U.S. Federal Reserve Chairman. Greenspan held the post from 1987 to 2006 and is currently working as a private advisor and providing consulting for firms.
Greenspan has reflected on his highly influential career in his new book "The Age of Turbulence." The 531-page book is a mixture of Greenspan's memoirs and his thoughts on economic policy. The book touches on a variety of topics ranging from his dalliance with a career in jazz in his early life to a number of essays predicting his economic forecast for the future.
Through his career, Greenspan worked with a number of U.S. presidents and he singles out Ronald Reagan and Bill Clinton for their deep knowledge of both domestic and international economic markets.
But Greenspan, a free market proponent and Republican, criticizes current President George W. Bush for not exercising his veto power to stop spending programs.
"He thought he could actually get the Republican leadership in both houses to do his will, but he failed," Greenspan said.