Season 1 · Episode 369
Better the dollar you know?
Demand for US bonds and shares is adding to the strength of the US dollar this year, pushing up import costs for other nations and addling to inflation pressures. Phil asks Steve, is it time to reassess free floating exchange rates.
Debunking Economics - the podcast · Steve Keen & Phil Dobbie
September 20, 202347m 38s
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Show Notes
The US dollar is creating real problems right now. Speculators are buying it up as US Treasuries (bonds) offer higher yields at lower prices than other forms of sovereign debt. US shares are also proving popular as talk of a US soft landing intensifies, suggesting they’ll be more scope for company growth in the US than just about anywhere else. All of that is adding to the strength in the US dollar, which is weakening the value of other currencies. That means other countries pay more for importing goods, adding to the inflation that central banks are trying to bring down. It’s a scenario that wasn’t foreseen by Friedman when he advocated for floating exchange rates. He believed floating exchange rates would balance out terms of trade, but clearly that’s not happening. So, Phil asks Steve this week, is there a case for some form of capital controls, or other restraints on the flow and value of currencies?
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