Friday, June 6, 2008

The Weak Dollar: Between a Rock and a Hard Place

Are Bernanke's hands tied on inflation? - Jun. 6, 2008The short story here is that the dollar has shown mild strength in recent weeks after losing ground for over a year. The weak dollar favors exports, but makes imports more expensive. Oil's steep price climb is due to supply and demand panic and commodities speculation, but the weak dollar is a significant factor.

So Bernanke's trying to "jawbone" the dollar up. If you can talk it up, that's a whole lot better than strengthening it by raising interest rates. Raising interest rates right now would kneecap a struggling economy. So will raising taxes as Democrats, Inc. under Pelosi and Obama will do.

It's a screwed situation. The liberals are thrilled. The press plays politics and sits on its hands while Rome burns. Read all about it (except for the last part)by clicking on the link.

No comments: