July 27,2019

【Currency wars】

Opinion: America should resist the temptation to weaken the dollar.

Starting the passage:
Usually the pre-eminence of the dollar is a source of pride for whoever occupies the White House. But Donald Trump … So far this is mostly a war of words.It could easily escalate into something worse as many of the conditions for a currency war are in place.

Stating the sluggish world economy & cheap currency to gin up:
1)The IMF this week revised down further its forecasts for GDP growth in 2019.
2)Interest rates in the rich world are low and cannot fall much lower.
3)There are real or imagined constraints on the use of fiscal stimulus.

Stating the condition for America:
Printing dollars to sell would complicate monetary policy, but that is a trivial objection. The Federal Reserve is set to cut interest rates in any event. A bigger headache is which currencies to buy.

Stating the possible solution:
The best remedy for the dollar’s strength is stronger economic growth outside America. Fiscal stimulus across the euro zone would help, of course. But one policy is in the gift of the White House. An end to the trade wars would lift the fog over the world economy.

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