Wayne,
A monetary policy has a specific target rate for money supply. Depending on that level, it may be termed loose. Some schools of economists equate a loose monetary policy to inflationary monetary policy. The purpose behind is immaterial. So, I ask again, what is the difference between a loose monetary policy in general and one specifically targetted at an attempt to hyperinflate out of the Great Depression? Money supply levels are all that matters.
I don't know all the specifics of the Euro, but I think US bond yields are higher and Europe's current growth is slower.
Japanese bond yields were much lower (nearly 0%, how muh lower can you go?) than that of either the ECB or the US when the Euro-Dollar-Yen parity at 1-1-100 was almost achieved (i.e. the Yen strengthened whereas the Euro weakened) a few months back. How do you explain this based on bond yields alone? The key factor is relative growth.
Growth matters. Period. Unfortunately for the EU, the ECB is dominated by inflation hawks (but it seems that they too are learning, if only slowly).
US capital is attracting money because of growth and not momentum. 6% GDP growth for the world's largest economy is not a triffling matter. The market is quite rational there. As for the future, if the USA stops growing the EU starts to grow, the tide will be reversed. I will invest in the EU companies then, but I suspect that many on these thread will conclude that the US represents value and the EU a bubble.
Sad.
Central banks accumulate currencies as a matter to routine work, just as you and I withdraw cash at ATMs. They intervene in the currency markets, too, and that's part of the job description (and has been that way for centuries). Why you think this is a conspiracy is beyond me. I think you are getting too emotional about this whole thing anyway.
-BGR. |
