The coming US dollar crisis Message Board

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Strategies & Market Trends : The coming US dollar crisis

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To: Real Man who wrote (3742)	2/3/2008 7:30:02 PM
From: RockyBalboa	Read Replies (1) of 71475

There are two reasons why the ECB might act what seems to be "responsible" at first glance: Their rate changes are much slower and less volatile compared to the US. It could be for the reason you mentioned, namely that the ECB simply has different economic targets, excluding stock price developments. Historically, the German Bundesbank was leading the rate setting in core Europe for several decades and its spirit is still alive in the ECB. Despite the fact that after the introduction of the EURO adjustments in intra European exchange rates are no longer possible and one parameter for policy setting has been sacrificed. (As a result the European ecomomy shows some imbalances). It has yet to be shown which stance (to be always accomodating and sometimes proactive like the Fed, or to be slow in responses due to slower changes in economic variables and its bigger independence from both politics and stock market movements) has a larger impact on the amplitude of economic cycles. This is what ultimately counts. Absent from growth, people hate excessive volatility, particular in real ecomomic cycles. Frankly, I dont know what works better in that regard, ECB or US Fed.

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