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Politics : Foreign Affairs Discussion Group

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To: bentway who wrote (241551)9/11/2007 3:07:52 PM
From: Sun Tzu  Read Replies (3) of 281500
 
hmmm...what to do if you are the Fed...should you raise the rates to defend the dollar and make the subprime debacle even worse...or should you lower the rates and let the USD sink to an abyss not seen since the gold standard? The problem with the latter is that aside from encouraging the rest of the world to dump this worthless piece of paper, the falling dollar would also drain the liquidity in the market by scaring everyone from the yen carry trade...between a rock, and a hard place.
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