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Jim Cook



Every once in a while I switch the TV channel from Fox to CNBC to see what the liberals are saying.  After listening awhile I get a deep sense of hopelessness and foreboding for our country.  The most important thing for the left is giving money to people.  They are happy to see the growth of food stamps, disability payments, housing subsidies, free healthcare and all the other welfare benefits.  They utterly fail to see the damage it is doing to the recipients.  Whole cities that once flourished have deteriorated into rotting eyesores populated with shambling hulks of chemically dependent drones.  These people are no longer employable.  They have become incompetent and helpless and the liberals can’t see that it’s their doing.

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Best of Doug Noland
October 22, 2009
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Doug Noland

Renewed U.S. dollar weakness has evoked calls for Washington to implement a true strong dollar policy.  Larry Kudlow is calling for a supply-side cut of marginal corporate tax rates and for the Federal Reserve to hike rates 25 bps in support of our currency.  He knows “none of this is gonna happen.”  Others believe the focus should be trimming our massive federal deficit.  A move to fiscal and monetary restraint is surely needed to help stabilize the dollar.  Restraint is not going to happen.

Perhaps chairman Bernanke tossed a tiny bone to the currency markets yesterday evening.  Yet everyone in the world knows U.S. policymaker focus is on aggressive short-term stimulus with the objective of jump-starting rapid economic recovery.  Officials from both the Federal Reserve and Treasury have stated their view that a strong U.S. economy is the best prescription for a strong dollar.  Simple enough.  So, perhaps they’ll increasingly be compelled to tweak their comments in hope of influencing currency trading.  But don’t hold your breath waiting for a meaningful shift in strategy – say aggressively boosting rates or slashing spending – to protect the value of our currency.  Current policy is not the primary issue anyway.

Non-productive Credit expansion/inflation is the bane of currency stability.  The dollar’s fundamental problem these days lies with the underlying structure of much broader systemic issues.  Indeed, ultra-loose monetary policy, scary deficits, and ongoing dollar devaluation are all consequences of deep structural maladjustments to the services and consumption-oriented U.S. “bubble” economy.