Tag: "dollar"

The Dollar: Beggar My Neighbor, or Myself?

The headline in today’s Wall Street Journal says “World Tries to Buck Up the Dollar.” The headline writer no doubt savored the opportunity to use “buck” for its double meaning even though it might have been more accurate to say “World Tries to Hold Down It’s Currencies.” That would have gotten closer to the world’s […]

Dollar-Yuan Diplomacy

My 15 Seconds I attended a conference in Beijing in 2003 sponsored by the Chinese government. While in China, I also met with several Chinese officials, including the new Premier, Wen Jiabao, officials of the central bank, and the agency in charge of maintaining the exchange rate of the Yuan, or Renminbi. In several television […]

Dollar Confusion

Credits in the U.S. balance of payments give rise to a demand for dollars. Debits reflect the supply of dollars. Together, they determined the exchange rate for the dollar. So far, so good. Everybody knows that. Then why is it that virtually all the commentary on the dollar on financial TV and in blogs fails […]

More on the Dollar

Following on from my previous post, the dollar can be boosted in very indirect ways. Given the zero-sum relationship between the nets of domestic investment and domestic saving, government spending and taxes, and exports and imports, an imbalance in the first two categories will require a balancing change in the third category, which is the […]

The Dollar, the Deficits, China Holdings and Domestic Investment

We continue to discuss the topics above as separate issues, without acknowledging their interdependence. They are mutually determined as in the solving of simultaneous equations. For example, our budget deficit indirectly, and our current account deficit more directly, affect the dollar exchange rate and the size of our trade deficit (and capital inflow). With China’s […]

The Dollar: A Victim of the Classical Keynesian Divide

Last year I said that I felt about a strong dollar like St. Augustine felt about chastity. "Lord, make me chaste, but not just yet." My version was, "Lord, give us a strong dollar, but not just yet." My point was that while a strong dollar had benefits in normal times it would make a […]

Q: Will Helicopter Ben Support the Dollar?

A: No, Not directly, but Yes Indirectly.   Channeling the FOMC I remember once when the head of the trading desk at the New York Fed was giving his report on international operations, the FOMC broke into applause when he announced that there had been no dollar intervention during the past year. While fixed exchange […]

The Dollar and the Yuan

Turning the Tables   Treasury secretary Paulson and others urged China to let the Yuan rise without emphasizing the implied relative decline in the dollar. Treasury secretary Geithner went to China to reassure Chinese officials about the strength of the dollar without emphasizing the implied relative decline in the Yuan. By questioning the dollar, China […]

Will low Fed Interest Rates Cause Inflation?

On Tues. I appeared on The Kudlow Report to discuss the prospect of long term inflation. I made the remark that monetary policy is not that easy, and the Fed's main concern should be preventing deflation. I also noted that a weak dollar in the short term could help with economic recovery. On the May 20 Kudlow […]