VANCOUVER, Canada – When we woke up in the morning, the TransCanada had already heaved itself over the highest point in the Rockies.

Gone were the dense forests of the East. Gone were the wide-open spaces of Saskatchewan and Alberta. We were in British Columbia – rolling downhill, following the gray-green river downstream, through boiling canyons and lazy flats…

Does any country have more bountiful natural resources than Canada?

Timber, food, cattle, minerals, water – Canadians have it all.

Too bad: When it comes to prosperity, there are few things as dangerous as inheriting money or having abundant natural resources.

Gagging on Oil

Rather than making or inventing things… or providing useful services… a resource-rich economy tends to sell itself – by the ton.

When commodities boom, the miners, farmers, and lumberjacks live high on the hog. But when they fall – the economy falls with them.

Canada's economic growth was negative in the first quarter. The country is the world's tenth largest exporter of crude oil. And oil is in its worst downturn in 30 years, according to Morgan Stanley.

The U.S. oil price has dipped below $50 a barrel. Along with it, the entire commodity complex – upon which much of the economy of Canada depends – could be dragged further down too.

Why?

Even more dangerous than resource abundance is economic “guidance” from the feds.

First, Alan Greenspan kept rates too low after the mini-recession of 2001. Then the Bernanke Fed pushed them down to near zero and kept them there for the last six years. And now Janet Yellen is steering the same course.

The cheap credit gave resource producers the means to overproduce and consumers the wherewithal to over consume.

At such a low cost of borrowing, producers could earn positive cash flow without regard to real economic results. And with the Fed's rate fixing falsifying the cost of capital, they didn't know if they were really making money or not.