Have you been worried about the dramatic drop in the dollar? Are you worried that the dollar is falling because of our ballooning deficit or the fact that this country is printing money like there is no tomorrow? Well if the Fed is not worried maybe you shouldn’t be either.
Panic time is over! The President of the Philadelphia Fed, Charles Plosser, says the drop in the dollar reflects the end of panic. In fact he even says its drop in value should not be a surprise and was even expected. Well yeah if you keep printing money and keep rates below zero. Take that Nouriel Roubini! Mr. Plosser says that there is no particular reason why you wouldn't expect the dollar to go back to where it was before the panic set in.
He says that the U.S. government has historically let the dollar fluctuate, and a weaker dollar in recent years can be understood as a market response to imbalances in the U.S. current account. The dollar as an instrument to tackle asset price bubbles, monetary policy alone isn't adequate, and that more research should be made on the issue of whether there's a connection between policy rates and such bubbles.....Read the entire article.
What do market wizards have in common?
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