This time urged by new record low Fed target interest rates (0.25%), the US dollar has resumed sliding steeply against foreign currency such as the Euro and Yen (vs. which it is at a 13 year low).
It seems that the Fed is more interested in artificially boosting the NYSE above a certain limit (some speculate that the government will do anything to keep it above 8000) rather than take the bitter pill of deflation (which, if prolonged has it's own serious problems).
This is certainly bad news for the US dollar (and thus the US) long term, and one can only hope that the rate cut is a temporary measure and will be reversed once a reasonable market turnaround occurs.
Desperate times call for desperate measures, some may say, but the US dollar just reeks of desperation right now.
Further reading: Bloomberg
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Here is a counterpoint argument (at Forbes, basically summed up by saying that this interest rate cut is needed to counter the deflation and then must be reined in before it causes a big inflationary push (sound familiar?). Also makes the point that while US dollar strength is good in the long run, weakening of the dollar has really helped our exports lessen the trade deficit in the interim.
Your thoughts out there?
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