globalview99

Falling Dollar: Finally Front-Page News

The cheap dollar is an essential strategy of both the FED and the WH to make US goods and services, well.., cheap so that they sell more; and conversely to make foreign goods and services more expensive so they don't sell like American product.

This was the strategy of the Bush and Obama administrations b/c it served the same goal, to create more jobs for Americans. In a free trade world, a governement can not throw up protective tariffs without bringing the whole global trade system down. So they use monetary policy to make their goods and services cheaper.

This works except for the Chinese who peg their currency to the USD. So for the foreign governments, their counter strategy must be to buy dollars to make the USD more expensive or at least counter the effects of the forces driving dollar down. Without zero interest rate and QE, we would have massive deflation. Even with it, there will be deflation, but nothing like the 1930's.