Technically, Ben can print and raise at the same time, if
needed. He did it in 2004-2006, but back then we were in
a credit bubble, so a tiny sprinkle of $8 billion immediately
caused fire. That slowed down the dollar some. I think it
even had an up year in 2004, but I may be wrong.
Everything is fiat, so when you are shorting the dollar,
your bet is that Trichet is more prudent and won't print,
since the USD index is essentially inverse Euro. You can
do that, play the trend in forex, but all of them listen
to every sound from the owners of respective printing presses
who call themselves "policy makers". Most play the carry
trade anyhow, cause it pays. Sometimes these printing press
owners choose to manipulate currencies. It's not true that
it does not work if there is joint intervention. In fact,
most major tops and bottoms are achieved through exactly that,
and BOJ kept the Yen where they wanted, in a range between
105 and 120, for quite some time. Ditto Bank of China. They
can keep the Yuan fixed to dollar forever. It's the other
side that causes problems, a CB can't make a currency strong
without ruining the economy. Weak? No problemo. -g- |
