In A World Gone Loonie, Our Neighbors to the North Mark Canada Day

Elle Patille displaying the Canadian flag in a manner I wish we'd see more often. Photo via Toro Magazine.

Sometimes referred to derisively as "America's Hat" or "Our 51st State", the last couple of years have been quite good to Canada. For example- once the butt of all manner of jokes, their currency- known as the Loonie for the $1 coin bearing the image of a loon- has proved to be exceptionally resilient since the start of the 2008 global economic crisis- at times exceeding the value of the US dollar in the foreign exchange market.

'How resilient?' you might be asking. Iceland was hit particularly hard by the 2008 economic crisis and as their banks were nationalized or being placed into recievership. The value of their currency- the Krona- plummeted against the Euro and US Dollars, accordingly.

With wildly fluctuating exchange rates between the Krona and other major currencies, Icelandic economists came up with a unique proposal- replace the Korna with the Loonie.

Gudjonsson is an economist at Iceland's Research Center for Social and Economic Studies.

He recently stated that Canada and Iceland share Arctic geography and export-driven economies. Gudjonsson also noted that Canada's sound economy is buffered by a wealth in natural resources like oil and water, making the loonie a stable long-term bet.

"Their export mix is very, very similar to ours," he said in November

Now, with the eurozone facing ongoing debt issues, Iceland is looking west for a currency solution.

While Iceland would lose their autonomy in terms of monetary policy if they ditch the krona for the loonie, Gudjonsson said last year that the move is a "sensible" choice.

Investors and currency traders have begun using the loonie as a hedge against inflation or devaluation of major currencies such as the US dollar, yen or euro.

What's the secret behind the suddenly mighty loonie in recent years? Canada's natural resources and demand from growing economies like China and India. Canada exports oil, wheat, gold, uranium, timber, natural gas, paladium, grain, coal and silver just to name a few. Although there's a ready market for many of these materials in the USA, increasing demand from Asia has driven up the prices of these commodities in recent years. I recall a conversation at a sports bar with a [drunken] businessman from Toronto right around the 2008 economic crisis. He basically explained that should you see the price of oil go up significantly, look for the loonie to gain strength against the world's major currencies. There was more to it than that, but ever since then, the basic premise behind his explanation has held up.

While this makes Canada an increasingly expensive destination for visitors from the USA or Europe [tourism also remains important to Canada's economy- NANESB!], this has also provided a large measure of stability to the Canadian economy.

Did I mention how much I've come to admire Canada? In recent years, they've demonstrated that they're unapologetic about taking advantage of their natural resources and have rolled back some of the quasi-socialist laws and regulations that the American left has looked to for inspiration for decades- perhaps the most notable being this year's demise of Canada's costly long-gun registry.

Canada day will be marked this year in a number of ways- Canada's 'birthday cake' was cut with a sword at Halifax's Citadel while more than 30 ceremonies throughout the country will have 1500 people sworn in as Canada's newest citizens. In Ottawa, Winnipeg and British Columbia, thousands of people participated in 'living flag' events where as many people as possible in red or white tops would gather in a public space to try and form a mosaic version of Canada's red and white maple leaf flag.

Of course, just like the 4th of July here, Canada Day will be marked with a fireworks display in many cities and towns