Fed Policy Lifts Greenback

Sam Sherraden — Thu, 05 Jun 2008 16:52:00 -0400

In his most recent speech, Ben Bernanke spoke about the dollar's weakness and its impact on producer and consumer price inflation. Bernanke has moved from focusing entirely on stability and growth to fighting inflation and the dollar decline. Folks such as Martin Feldstein recently said that the US didn't have a strong dollar policy, but it appears as though the Fed may have switched gears to fight inflation, and sees a strong dollar as a means to do so.

Snapshot asks, will the Fed's stance on the dollar continue to push the greenback higher?

Ben Bernanke - Remarks on the economic outlook
PIMCO - Exchange Rates Since the Last Global Financial Crisis: What My Crystal Ball Didn't Tell Me in 1998
Societe Generale - Is the nascent USD rally the last hurray before another fall?
Brad Setser - Does the US still have a strong dollar policy?

Any Levers Left?

Sam Sherraden — Tue, 04 Mar 2008 19:39:00 -0500

It is unclear what response, if any, will right the U.S. economy. Chairman of the Federal Reserve, Ben Bernanke, gave a speech today calling for "a vigorous response" to the mortgage crisis and suggested reinvigorating government-sponsored enterprises, like Fannie Mae and Freddie Mac, with increased regulation and possibly writing down the principal on home mortgages. Treasury Secretary Henry Paulson said in a speech yesterday, "Let me be clear: I oppose any bailout." It appears policy makers, officials, and economists still cannot agree on appropriate solutions to the mortgage crisis.

Snapshot asks, what policy will get the U.S. economy out of its current slump and not threaten long run growth?

Bloomberg - U.S. Stocks Fall on Bernanke Plan
Ben Bernanke - Reducing Preventable Mortgage Foreclosures
Morgan Stanley - If Monetary Policy Can’t Do the Job, Then What?
David Greenlaw - Leveraged Losses: Lessons from the Mortgage Market Meltdown
Henry Paulson - U.S. Housing and Mortgage Market Update before the National Association of Business Economists