QE2 may well be the global driver of growth or put differently QE2 is actually QE20.
The US may be a key driver of the currency wars because it is willing to flood the global economy with dollars. Who cares if the dollar goes down. This will be better for exports which may be the driver of job creation. Who cares if there is higher inflation. The increases in asset prices will be good for all, especially home-owners who need higher real estate values. If bond holders are hurt, no problem. The higher inflation will reduce the value of nominal debt outstanding.
The rest of the world will have to inflation along with the US. They may not like it, but what can they do? If the do nothing their currencies will appreciate and they will lose export business to the US. If countries want to fix or limit their exchange rate appreciation, they will buy dollars and sell their currency which will be inflationary. The word will be in an asset price inflationary spiral. Investors should buy real assets and prepare for a wild ride.
The US may be a key driver of the currency wars because it is willing to flood the global economy with dollars. Who cares if the dollar goes down. This will be better for exports which may be the driver of job creation. Who cares if there is higher inflation. The increases in asset prices will be good for all, especially home-owners who need higher real estate values. If bond holders are hurt, no problem. The higher inflation will reduce the value of nominal debt outstanding.
The rest of the world will have to inflation along with the US. They may not like it, but what can they do? If the do nothing their currencies will appreciate and they will lose export business to the US. If countries want to fix or limit their exchange rate appreciation, they will buy dollars and sell their currency which will be inflationary. The word will be in an asset price inflationary spiral. Investors should buy real assets and prepare for a wild ride.
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