Tuesday, November 17, 2009

Bernanke Doing the Potomac 2 Steps

Fed Chairman says he supports a "strong dollar" policy as quoted here.

Quiz time: Bernanke has been for some time on record for keeping the near zero interest rate policy because the US economy remains weak and the politically explosive unemployment rate still rising.

Can he talk up the dollars by words? If so, provide 2 reasons. If not, why not?

Second quiz.

China is blaming the US for exporting inflation (here) and here because the zero interest rate policy provides a risk free leveraged currency carry-trade that is all the rage right now. Witness the rise in Aussie, gold, properties and the stock markets.

Give 2 reasons why China's criticisms are correct. And give 2 reasons why China is disingenuous in her criticisms in her own currency policy. Please focus only on the economics, not politics.

After you work through your answers there is money to be made in the currencies market.

Have fun and good luck.

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