Well, it certainly seems like the Fed has decided the only real way to get out of this mess is through inflation. With the dollar in a free-fall and no support at all from any of the usual suspects, it appears that the Fed and the administration are happy with this decline.
Perhaps, they are thinking that the dollar’s free-fall will stoke foreign demand for U.S. products. What they seem to forget is the fact that we import most of what goes into the products we manufacture here. Therefore, you’re inflating the cost of the goods to be sold thereby increasing the sales price and taking away any price advantage a falling currency value might have provided you.
At this point, the only thing inflation will do is to bring back memories of the Carter years and stagflation.
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