Wednesday, August 4, 2010

The Fed has few policy choices left

The Fed has few policy choices left in a world where deflationary forces continue to grow and US domestic growth is in trouble. Government stimulus doesn't work and has only weakened the US economy, helping to make monetary policy impotent. Thus, an implicit weak dollar policy may be very high on the Fed's list of tools it has left to use.
The big trigger for a decline in the US dollar last time was the announcement of the Feds' Quantitative Easing program. Stay tuned.

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