How Canada’s largest pension fund finances Colorado fracking

Canada is one of the biggest foreign investors globally. No one wants to invest locally these days.

If the Canada Pension Fund was wholly invested in Canada, it would have the issues of:

  • Creating a demand for Canadian currency from the investor market
  • The lack of availability of Canadian currency would force its value to increase a lot
  • The real growth of the economy would not support the artificially increased value of the currency
  • Aggregate Demand would exceed aggregate supply, causing an overheating of the economy
  • The higher value of currency would contract the export market, shrinking economic growth
  • Eventually the bubble would burst and the economy would collapse and the value of the Dollar will plunge.

When the market self-correct, the value of the Canada Pension Fund, solely invested in Canada (in Canadian dollars) would lose value compared ot other currencies, meaning Canadians would not have made a single penny out of their investment because it was solely invested in Canada.

By investing abroad in multiple currencies, the Canada Pension Fund shields itself from localize downturns, prevents artificial overheating of the Canadian economy and insures itself from the fluctuations of a single currency.

/r/canada Thread Parent Link - coloradoindependent.com