Don't turn up the heat, it's too cold! That seems to be the message from the rest of the world about the decline in the dollar that might result from the latest round of quantitative easing QE by the Fed.

The NYT told readers that:

"The Fed’s action, by lowering American interest rates, can also cause money to flood into other countries as investors seekhigher [sic] returns — which can threaten to overheat those countries’ economies."

Okay, here we have a statement from the NYT that QE is bad because it will lower interest rates in other countries and cause their economies to grow more rapidly. But, elsewhere we are told that the problem with QE is that it will lower the dollar which will make U.S. goods more competitive internationally. This will reduce the exports of developing countries and slow their growth.

So, other countries are mad about QE because it can both cause their economy to overheat and also because it will slow growth. Let's see, QE will make these countries both grow too fast and too slow. Now that's a really bad policy.

Leave your comments

Post comment as a guest

0
  • No comments found

GuideStar Exchange Gold charity navigator LERA cfc IFPTE

contact us

1611 Connecticut Ave., NW
Suite 400
Washington, DC 20009
(202) 293-5380
info@cepr.net

let's talk about it

Follow us on Twitter Like us on Facebook Follow us on Tumbler Connect with us on Linkedin Watch us on YouTube Google+ feed cepr.net rss feed