Photo: Munk Debates
In a debate going on tonight in Canada between David Rosenberg, Paul Krugman, Larry Summers, and Ian Bremmer, the attendees were asked what they would do for the Canadian economy.Krugman’s simple answer: “Hold onto your own currency.”
Of course, Krugman recently clarified quite nicely that the fundamental problem in Europe was the abdication of sovereign currencies, and the fact that countries like Italy, Spain, and Greece had relegated themselves to the status of third-world countries that are forced to borrow in foreign currencies.
So obviously he doesn’t think Canada should be entering a currency union anytime soon.
But he noted something else interesting, which is that two of the best countries in the world are Canada and Sweden, which both have their own sovereign currencies and are appended to much larger economic blocks. Both have made it through the crisis and bust fairly nicely, owing in no small part to their currency flexibility.
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