As Fed Retreats From Stimulus, Central Banks Overseas Expand Theirs
The US Federal Reserve has been "turning a blind eye" according to this article on foreign currency manipulation. If the Fed begins to tighten its monetary policy, there is a good chance that economies in Europe, Latin America, and in Asia will experience a recession. The article states that the Fed's delayed action is due to the benefits the US will see from global growth, even if it means fewer jobs and harder to sell in the short run. The increasing value of the dollar has meant that companies have had increasing difficulty selling, but have attracted a lot of foreign investment. This has also slowed inflation. The Euro has purposely declined in value and they continue to do so. This will increase the amount of exports and decrease their imports, mainly oil, that will help spur much needed inflation. The Japanese have doubled the money supply to decrease the value of the yen by over 24%. Despite this the Japanese economy shrank by 7.1% after a sales tax increase.
What do you feel about currency manipulation to spur domestic growth?
http://www.nytimes.com/2014/10/03/business/international/as-fed-retreats-from-stimulus-central-banks-overseas-expand-theirs.html?ref=business&_r=0
Currency manipulation does not seem like the best way to spur domestic growth. It is very risky. However, I can see why the US would "turn a blind eye" given that a stronger global economy would likely benefit our own. But a strong US dollar could have negative impacts in other parts of the world, so it is difficult to say what is the best course of action.
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