Bernanke and the forever (currency) war – BBH

By FXStreet FXStreet (Delhi) – Research Team at BBH, notes that the former Fed Chair Bernanke has penned a blog post that seeks to refute claims that the US monetary policy was the start of a currency war.

Key Quotes

“This claim was first levied by Brazil’s finance minister in 2010 as the Federal Reserve, under Bernanke’s leadership, launched a long-term securities purchase program commonly dubbed Quantitative Easing (QE).

Many in the media and the analytic community ran with the currency war concept, much to our dismay. In our work over the last several years, we have been critical of what we thought was a misuse of the concept.

Bernanke provides a quasi-official response. His argument is two-fold. The first part in effect claims that the currency war claim is based on incomplete analysis. It is true, he admits, that holding everything else constant, the easier monetary policy in the US would drive the dollar down and boost exports.

However, he quickly notes that there are other moving parts. Everything else is not constant. Specifically the same monetary policy that may weaken the dollar, boosts domestic demand by stimulating employment. This lift income and demand for goods and services, some of which will …read more

Source:: FX Street