Wednesday, May 25, 2011

Currency Conundrum

An economy gripped by stagnation
Needs a weakening currency flotation,
But on this point, the Fed
Punts to Treas'ry instead,
Who repeat their "strong dollar" fixation.

UC Berkeley Professor Christina Romer, erstwhile head of President Barack Obama's Council of Economic Advisors, opined in the New York Times over the weekend on the disconnect between reality and posturing on the value of the dollar. While a weak dollar would encourage US exports and foreign investment inflows in a time of economic weakness, no US public servant will acknowledge this point, except to complain about the artificially low Chinese yuan. Failure to voice support for a Strong Dollar evidently brands one as un-American at home, and unfairly American abroad.

Tip o' the hat to Professor Greg Mankiw.

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