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Minister of Finance Jim Flaherty. right, and Bank of Canada Governor Mark Carney show off the new $20 bank bill during a ceremony in Ottawa on May 2, 2012.
Minister of Finance Jim Flaherty. right, and Bank of Canada Governor Mark Carney show off the new $20 bank bill during a ceremony in Ottawa on May 2, 2012.
(Adrian Wyld/THE CANADIAN PRESS)

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No hoarding here: Carney forgot to check cash flow

Bank of Canada governor Carney made a glaring omission before admonishing corporate Canada for hoarding cash – he forgot to check cash flow. Corporate investment in Canada continues to track cash flow generation and, in fact, capital investment by domestic companies is above normal levels.

If Governor Carney’s charges of cash hoarding were accurate, we would expect to see capital expenditure growth falling below cash flow. But since June 2012 the reverse is actually true. Canadian companies have continued to spend and invest while cash flow growth has declined.