The author discusses the discrepancy in monetary policy approaches between the US and Canada. They highlight that while Canada's unemployment rate is increasing and its inflation rate is at 2%, the US unemployment rate is flatlining and inflation remains above target. The author attributes this difference to the fact that the US financial system is less sensitive to changes in short-term interest rates compared to Canada. They provide examples such as US companies being able to issue fixed-rate bonds and homeowners having 30-year fixed-rate mortgages, while Canadian companies and homeowners are more inclined towards floating-rate debt and mortgages that reset every few years. The author concludes that this difference in sensitivity to interest rate changes is why the Fed has difficulty implementing consistent monetary policy and why there is increasing economic dispersion between the US and other countries.



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