Former Bank of Canada governor suggests fixed Fed hiking schedule
Dodge showing where he wants rates to go
There are always crazy ideas floating around financial markets but this one comes from a surprising place.
Former Bank of Canada Governor David Dodge suggests a globally-coordinated round of rate hikes.
He's in Toronto today giving a speech and saying that low interest rates "may actually be retarding growth" as companies feel no hurry to borrow and invest.
Dodge was the BOC leader from 2001 to 2008 when Carney replaced him.
He laments low banking profitability while ignoring that Canadian financial corporate profits represent 32.3% of all profits in the country last quarter.
He said the Federal Reserve should announce a fixed timetable to raise its benchmark rate to 2.00%.
"Such a policy would facilitate the better functioning of financial markets and reduce uncertainty," Dodge said. "If other central banks committed to follow the Federal Reserve's lead and fiscal authorities pursued expansionary policy, the current monetary policy straitjacket could be ended."
The current economic paradigm isn't really working but taking money away from people via rate hikes when there is no inflation is like putting the unemployed in prison. You can't punish your way to demand.
