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U.S. Dollar on a roll


FreeTime

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"US rate cut towards zero expected"

When/if they reach 0 -> what else can the USA do???

 

A US rate cut of 50bp is purely symbolic. The effective rate is already at 25bp, not the 1% target rate. US will do the things Japan did. In short, they will find other ways of injecting liquidity into the banking system. IMO, this will be of limited effect until we get through the worst of this recession - chicken or egg kinda thing. As Bernanke/Paulson found out, giving banks cash is much easier than getting them to lend in this kind of environment. This is a good thing though. Making bad loans to get through a recession is a short-sighted fix.

 

Milton Friedman once suggested a theoretical solution of the government printing money and dropping it from helicopters for citizens to pick up and spend. That's how Bernanke got the nickname Helicopter Ben.

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Wonder how the inflation is doing?

 

Yes Japan found a solution but I don't think the USA could apply the same "recipe" and anyway I doubt many Americans are ready to "obey" the orders from the central bank/government like Japanese did....

 

Freedom a very "American" concept which might mean "doom" for the USA?

 

 

 

 

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A little forecast:

 

The Fed having just lowered its rate to between 0 to 0,25% the $ has dropped sharply against other currencies.

 

-> if the US economy restarts slowly (or at least the financial markets stimulated by the various measures being implemented) I would say the USD will drop further against other major currencies.....

 

Would be good for the services industry and exporters in the USA, not so good for US travelers...

 

Would have loved a parity USD/euro and both being stronger against the bht but it seems that it was just a dream which will fade fast.

 

(I could be wrong but not more than many financial analysts these last months)

 

 

 

 

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Yes sadly and it seems the USD is continuing to fall.

 

There are some people on this board who love to "compare" the USD with the euro...

 

This is silly because if either of the two is in trouble then this has negative effects on the other.

 

While we should try to "oppose" the yuan ...

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