So, despite printing a huge amount of money with their quantitative easing program, the US dollar has risen in strength against other currencies, something I find boggling. The only explanation I can come up with is that other countries are increasing their currency base even faster than the United States. As the article mentions, devaluing one's money is a good way to drive international business to your industry, despite other negative effects it will have.
The short-term effect on the United States will be to defer inflation as imports get cheaper. But (1) we can't count on other countries continuing to drive their currencies into the ground, and (2) we're so addicted to government spending it's unlikely we'll stop printing more money. In the end, the national and total monetary bases are expanding, and that means inevitable inflation.
Sunday, April 05, 2015
Subscribe to: Posts (Atom)