(Props to the Tanyas for offerring their music in the Free Lossless Audio Codec format.)
I was able to buy these things because the United States Dollar is skyrocketing. No doubt relative to most currencies, but in particular, relative to the Canadian Dollar.
My storage locker in Halifax costs me two hundred three Canadian Dollars on the twenty-seventh of each month. But the bank account from which my payment will be drawn is denominated in United States Dollars.
For about a year up until a month ago, the CAD / USD exchange rate remained quite constant at very nearly one-to-one. But since the end of September, the rate has grown linearly until it reached today's rate of USD $1.00 = CAD $1.27764.
See for yourself:
Upon plugging my monthly locker rental into their handy online currency calculator, I saw that I'd have forty US bucks to spare after paying my rent tomorrow. Delighted, I headed out to McCarthy Ranch to celebrate.
You might claim that I just answered my own question, yet I remain stymied. How could this have possibly happened? I - the last man on Earth you'd expect to understand money - somehow was able to work a special financial magic, and create real value out of - nothing!
Mike the Financier
Bonita was delighted too, as the wires I'll be sending her for the next little while will be much larger on her end, despite the fact that I'll be sending less from my end than usual, and using the savings to pay down my credit card.
I sent her the following just now:
I just had a long talk with my friend Matt about the
economy and general and the exchange rate in particular. I could
learn a lot from him - I did just tonight. He's a real smart guy, and
an active but quite careful and methodical investor.
The reason for the strong dollar, ironically, actually is the chaos
in the financial community. Investors throughout the world are
abandoning stocks and corporate bonds and putting all their money into
The "safe" investments generally don't produce much profit, but they
also don't lose value in times of trouble. The three main ones are
US Treasury Bonds, gold and United States Dollars.
The thing is, there is only a limited amount of each to go around.
The US Treasury has a bond auction each month, but it only sells
enough bonds to cover the US tax shortfall until the next auction.
The amount of gold is limited to all the gold that has ever been
mined, plus the very small amount that will be mined in the near
future. But the amount actually available to investors is much less, as most of the world's gold is locked up in bank vaults and not for sale at any price.
United States Dollars aren't exactly limited, as the Treasury can
always issue more of them, but to the extent it doesn't the dollar
supply runs short during panics and so the value of the dollar
US Treasuries and Dollars are regarded as safe because the US
government has never defaulted on any of its its debts. Matt
explained to me that despite the collossal national debt we have now,
as a percentage of the Gross Domestic Product we have a comparatively
much smaller debt than all but a few other countries - and all those
other countries are small ones like Switzerland.
The other factor is that some products can only be purchased with
dollars, crude oil for example. So most countries other than the US have to trade their own currencies for
dollars so they can supply energy for their economies.
I asked how long he thought the rising exchange rate would last, and
he thought it would be two to four more weeks - it's been going on for
a month so far. If the current rate of increase is maintained, the
CAD / USD rate could ultimately reach 1.4 or 1.5.
The rise will eventually stop because other nations, upon seeing how
badly they're getting screwed by having to pay for everything in
increasingly-precious US Dollars, will take steps to protect their
He said the rate would then level off, and likely would stay constant
for a while. I expect it won't go back down significantly until
stocks and corporate bonds are again regarded as safe investments.
There's no way that's going to happen any time soon. You should be
able to enjoy the high US dollar for at least a year, possibly two or
From Wall Street To Main Street
The whole economic thing has been to me, while quite frightening, rather
distant and abstract for the last year, ever since the
subprime crisis started. But it all got driven home in quite a stark
and personal way this evening when I celebrated at Borders with the money I'm
going to save on my locker, money that I only had because of this rather abstract concept called the exchange rate.
If it weren't for the skyrocketing dollar, moths would have flown out of my pocket when I tried to pay for my album. Compact discs, gourmet coffee and tasty
sandwiches cost real money, energy and labor to produce. Yet I was
somehow able to get myself one of each with money that as far as I can
tell just sprang up out of nowhere. I'm finding that whole concept
really difficult to wrap my head around.
I am grateful for any advice you can give me.