The Buck Stops Where?

The Wall Street Journal ^ | June 05, 2008 | Editorial Staff

[gpapa]

When Paul Volcker declared several weeks ago that the world was in a "dollar crisis," his successors at the Federal Reserve made their private disapproval very clear. This week current Fed Chairman Ben Bernanke waved the white flag over Mr. Volcker's point by declaring his own public concern "that the dollar remains a strong and stable currency." Apologies accepted, provisionally.

The tragedy is that this is big news. The Fed has monopoly power over dollar creation, and concern for its value ought to go without saying. Yet so great has been the Fed's dollar abdication in recent years, and especially since last summer, that Mr. Bernanke's words have come as a great global relief. As the dollar has strengthened in welcome response, the price of gold and oil has fallen in each of the last two days.

[america-rules]

A few years ago the WSJ and many others were praising the FED for the lower dollar policy because it lowered the trade gap and brought jobs back to the USA but now they want it both ways.

The FED can't turn the ship on a dime and it takes a long slow change and the only real way to fix the dollar problem is to raise interest rates which will put us in to a depression right now !

But then they will blame the FED for raising rates ?

[america-rules]

A few years ago the WSJ and many others were praising the FED for the lower dollar policy because it lowered the trade gap and brought jobs back to the USA but now they want it both ways.

The FED can't turn the ship on a dime and it takes a long slow change and the only real way to fix the dollar problem is to raise interest rates which will put us in to a depression right now !

But then they will blame the FED for raising rates ?

Clinton left President Bush many time bombs and this is one of them !

[gogeo]

Price stability where? Not in the U.S., where every economic report shows rising price pressure. Yesterday the feds reported that labor compensation rose at a healthy 4.9% for the first quarter, but only 0.6% after inflation. The Fed-inspired commodity boom has sent food and energy prices soaring, while wage gains invariably lag...

The WSJ, it's said, has the best editorial dept. anywhere. This could be true. Regardless, when they boof it, they really boof it.

The Fed cannot realistically control food and energy price increases driven by Third-world modernization. Period. Fed policy can affect domestic demand, but food and oil price increases are fueled by international demand, specifically India and China.

It follows, then, that they can't be responsible for what the WSJ calls the "Fed-inspired commodity boom..." and that policies which ignore this fact will at best not address the problem.

In the real world, ill advised policies usually make things worse.

[AmericaUnited]

the only real way to fix the dollar problem is to raise interest rates which will put us in to a depression right now !

Not exactly. Interest rates popping up a token 1 or 2 percent more would be more than compensated for by oil dropping back to $80 a barrel.

[Vet_6780]

You can't expect to export dollars and create rampant inflation for our trading partners without eventual backlash.

The buck stops here foreigners no longer want them.

[Toddsterpatriot]

The buck stops here foreigners no longer want them.

If they don't want dollars, all they have to do is stop selling us their stuff. Start buying our stuff. Is that happening?