Friday, November 19, 2004

Greenspan II

What's odd about Greenspan's proclamation that he's going to let the market take care of the dollar (by letting it slide), is that it seems to contradict his own actions. The Fed just raised rates which, in the simplest open economy story, should cause the dollar to strengthen by making U.S. bonds and other assets more attractive; this, of course, is the opposite of what he's telling the Europeans. Maybe the rate raise is responding to some other concern, and he won't raise rates (defend the dollar) any more, but it's still slightly queer.

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