Last Fall, I wrote the following blog post.
Subsequently, there were many more posts on this blog about the same topic.
Others in the financial press have similar viewpoints. However, I do not read much these days about the longer term effects from the skirmish with an all out currency war that the global economy experienced about six months ago.
Though the stated reason for Quantitative Easting II was to stimulate the U.S. economy, I believe the action is also a shot across the bow to export-oriented economies that manipulate currency exchange rates to keep prices low and competitive with American manufacturing, namely China. There is little mention these days about the trade deficit that is sucking value out of the U.S. and disrupting the global flow of money.
The U.S. Federal budget deficit in combination with the trade deficit is a major medium and long-term issue.
It would be great if the financial press took a detailed look at QE2, domestic and global economic growth, the trade and federal budget deficits, fixed exchange rates (china), and the future all in a single, concise article.
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