Money, the great creature of our trust and imagination, becomes ever less real. Most of it is already just code; the U.S. Federal Reserve "printed" unimaginable amounts of it over the past several years with nothing more than computer keystrokes.

Soon enough, there will be no loonies or toonies to make pockets sag, no colourful polymer bills to grasp and treasure. No greenbacks or euros either, for that matter. Fiat currency was only ever worth anything because people believed in it; why not believe in computer code?

Still, currency is much more than just a medium of exchange. Strangely, it gives us meaning.

National insecurity

Walid Hejazi, who teaches at the elite Rotman and Munk schools in Toronto, has concocted a lovely hypothetical for his pupils:

"If I could guarantee you that adopting the U.S. dollar as our national currency would create at least a hundred thousand jobs just from efficiency, would you vote yes or no?"

Dependably and overwhelmingly, says Prof. Hejazi, they vote no.

"They say we would lose our sovereignty. They say things like 'Canada wouldn't have been able to refuse to join the invasion of Iraq' and so forth."

This is the quavering voice of national insecurity.

Giving up our currency doesn't mean we have to follow the U.S. into war. (Emrah Gurel/Associated Press)

France gave up the franc, and Italy gave up the lira, and Germany gave up the deutschmark. Their citizens are now immune to exchange fluctuations within Europe, and none of their governments is bound to follow the other into war. All maintain independent national policies.

In fact, maintaining our own currency guarantees one and only one independence: Canada can set its own monetary policy, which, distilled, means the Bank of Canada can raise and lower interest rates.

That's a questionable form of sovereignty, especially nowadays, particularly in North America.

Banks may or may not follow suit (in recent years, they've taken to ignoring signals from the central bank, but these are bizarre times), and historically, we end up tracking American rates anyway.

Price for independence

What is absolutely certain, though, is the price we pay for this independence.

Look at your credit card bill after a holiday in the U.S. It will remind you that the dollars you spend down there are utterly different things than the dollars you earn here. The U.S. dollar costs about $1.37 Canadian right now. In just a few years, between 2002 and 2011, it went from $1.60 to parity and even below.

Americans barely notice this, but the exchange rate whipsaws Canadians constantly, and instability is damaging.

Logically, says Hejazi, Canadian businesses should invest heavily in innovation or new machinery or branding when the Canadian dollar is strong, in order to recover the competitive edge lost when the loonie rises and forces Americans have to pay more for our exports.

But they don't, he says, because they prefer to wait it out, hoping the Canadian dollar will drop again, and make their exports more attractive.

Similarly, when the loonie is weak, as it is now, Canadian businesses should invest in production capacity, in order to grasp the moment. But they often don't. Why? Because they're afraid our dollar might strengthen again.

An obvious solution is monetary union. As in euro. Canada could, if it wished, peg its currency to the U.S. dollar, or enter into a formal agreement.

(Don't forget, all currencies are ultimately just scrip for the U.S. dollar anyway. It is and will remain the world's reserve currency).

The reward of monetary union would be sweet harmony with the largest economy on earth. No more crazy swings. Canadians would be able to plan retirement with far more confidence. Businesses could make solid plans.

The penalty, of course, would be loss of monetary policy. The Americans would never consent to a common currency, or grant Canada a seat on the U.S. Federal Reserve.

Why not adopt the world's most powerful money? (Reuters)

But would it be such a great penalty, relative to the inherent reward? As it is, if the Fed raises rates and Canada doesn't soon follow, capital rushes south.

Further, as a past Fraser Institute study noted, Canada has already surrendered sovereignty by signing trade deals that restrict our right to protect and prefer Canadian industry.

So why not adopt the world's most powerful money? Why should I care whose picture is on a 10 dollar bill? Especially when a 10 dollar bill will eventually cease to exist?

I asked Jim Balsillie, former co-CEO of Research in Motion (now BlackBerry), what he thinks.

As he always does, Balsillie changed the conversation, arguing the economy has transformed so drastically that a lower Canadian dollar is becoming irrelevant.

Encouraging innovation

He points out that companies like Shopify, the wildly successful Ottawa-based innovator of shopping software, price their products in U.S. dollars anyway, which immunizes them from exchange swings.

"The dirty secret of tech," he says, "is that all a weaker Canadian dollar means to them is that they're paying their employees less."

If a lower dollar is such an advantage, he asks, why has the volume of Canadian exports not grown as the loonie has sunk this time around?

The only way for Canada to win, says Balsillie, is to own intellectual property and sell it. Like Shopify does. Like American companies do.

And the only way that can happen, he insists, is if Ottawa uses its taxation and regulatory powers to encourage innovation.

It's a hard argument to reconcile with that nasty bite on the credit card bill, but Balsillie is probably right. Companies like Shopify, which exist in the "economy of ideas," are rapidly crowding out old-school businesses on stock exchanges.

And anyway, monetary union is unrealistic.

Most Canadians are like Walid Hejazi's students: hell-bent on keeping our vulnerable little dollar, believing what they want to believe about the extent of our independence.

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