4 ms·

As far as I understand, weakening the USD for the benefit of parties foreign is not part of the federal reserve's mandate. Maybe it should be but it isn't. I'm

As far as I understand, weakening the USD for the benefit of parties foreign is not part of the federal reserve's mandate. Maybe it should be but it isn't. I'm also not sure how continuing with inflationary policy could strengthen the USD. Surely any delay in raising rates should weaken it relatively speaking? Also, it is natural for the USD to appreciate given the energy crisis and knock on effects from that, isn't it?

djbusby 4y ago
Why natural? Is it some effect of the "petro-dollar" thing?
- theplumber 4y ago
  U.S sells a lot of oil and gas and as it happens Europe needs both. A lot of capital is fleeing from Europe and other risky markets(China) to safe havens( the U.S). All this in addition to the fed rate cuts.
  - djbusby 4y ago
    Did you mean rate hikes? Isn't US Fed raising?
    - theplumber 4y ago
      Rate hikes indeed
lvl102 4y ago
The problem is really that they are doing it extremely fast while ignoring the very financial plumbing they made everyone around the world rely on for two decades. It’s quite shortsighted to keep USD at extremes to soften inflationary pressures in the US while letting the RoW and developing countries burn. It’s 2022 and everything is connected. There’s no such thing as a decoupled economy.
- landemva 4y ago
  Biden forked Russia out of Swift system, so the world is splitting (Russia, China, Iran).
- collegeburner 4y ago
  so you are saying we should sit through 15, 20% inflation for the sake of other countries? that's not the fed's mandate and you will never, ever get domestic support for that. nor should you tbh, we should not suffer for the sake of everyone else. we don't want the dollar quite this strong but it's better than the alterantive. regardless it's not all our choice. people will keep fleeing to the dollar for stability and that will strengthen it relative to other currencies. believe me this is not all fed policy or even mostly fed policy, we still have a lot of inflation so domestic winds aren't making it that strong. this is a "relative basis" thing. besides, what do you think the RoW impact would be if there was no safe currency to flee to? and lastly petrodollar go brrrrr, energy crunch means we will have a strong dollar like it or not.

djbusby 4y ago

Why natural? Is it some effect of the "petro-dollar" thing?

theplumber 4y ago
U.S sells a lot of oil and gas and as it happens Europe needs both. A lot of capital is fleeing from Europe and other risky markets(China) to safe havens( the U.S). All this in addition to the fed rate cuts.
- djbusby 4y ago
  Did you mean rate hikes? Isn't US Fed raising?
  - theplumber 4y ago
    Rate hikes indeed

lvl102 4y ago

The problem is really that they are doing it extremely fast while ignoring the very financial plumbing they made everyone around the world rely on for two decades. It’s quite shortsighted to keep USD at extremes to soften inflationary pressures in the US while letting the RoW and developing countries burn. It’s 2022 and everything is connected. There’s no such thing as a decoupled economy.

landemva 4y ago
Biden forked Russia out of Swift system, so the world is splitting (Russia, China, Iran).
collegeburner 4y ago
so you are saying we should sit through 15, 20% inflation for the sake of other countries? that's not the fed's mandate and you will never, ever get domestic support for that. nor should you tbh, we should not suffer for the sake of everyone else. we don't want the dollar quite this strong but it's better than the alterantive. regardless it's not all our choice. people will keep fleeing to the dollar for stability and that will strengthen it relative to other currencies. believe me this is not all fed policy or even mostly fed policy, we still have a lot of inflation so domestic winds aren't making it that strong. this is a "relative basis" thing. besides, what do you think the RoW impact would be if there was no safe currency to flee to? and lastly petrodollar go brrrrr, energy crunch means we will have a strong dollar like it or not.