OK, possibly I don’t understand that mechanism.
I do know how the Fed operates, and I admit at first glance I thought this was Venezuela again. Not pleasant thing to admit, but skim reading is a product of assuming things. I was not aware of Argentina’s problems.
OK, possibly I don’t understand that mechanism.
I do know how the Fed operates, and I admit at first glance I thought this was Venezuela again. Not pleasant thing to admit, but skim reading is a product of assuming things. I was not aware of Argentina’s problems.
...
All of these developing countries have debt denominated in dollars. When the Fed raises rates these countries have problems paying the debt with their own currency because it is weakening against the dollar. The dollar is rising because the Fed is raising rates.
Yes, most of these countries have fundamental problems. But when they all start having problems at the same time due to the actions of the Fed, it becomes a crises.
The bottom line is interest rates should be determined by the market, not the Federal Reserve.