Monday, November 2, 2009

Quote of the day

Buttonwood:
To the extent that carry trade (ie speculative) financing is supporting money growth, the Fed could be deceived into thinking monetary policy is looser than it really is. That could set up the markets for a nasty shock, in which the Fed signals an end to accommodation, the dollar surges, and the carry trade reverses. In such circumstances, not only would asset prices fall but the higher dollar would tighten US economic conditions at a very awkward moment.

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