Quote:
Originally Posted by Sidney Crosby's Hat
This is a really good idea and I think it would work in the US but not necessarily Canada where you need to raise interest rates if the US does to ensure the dollar isn't devalued. If you just had a temporary GST but the US kept raising their interest rates, there would still be significant inflation in Canada as a result of acquisition cost rising due to a weakened dollar.
Unfortunately, I don't believe the US has a mechanism for a national sales tax but it would definitely work down there (and if they were able to do such a thing, I'd be all for Canada doing it as well).
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I think relative changes in money supply would at least partially support the dollar, even if a bit of a carry trade opened up. I don't think Canada could do just the taxation option - likely you'd have to mix it with interest rate hikes. I think the combination would allow you to probably make both the hikes and the taxes much shallower.