Fed Policy: Devalued Currency and Investing Abroad?
In yet one more example of the rule of unintended consequences, the Fed’s low interest rate policy and successive rounds of quantitative easing is supporting U.S. companies with their oversees investments. So in other words, United States citzens face a devalued currency, (which means our money will buy less) due to the rampant use of the Fed’s printing press, and other countries benefit from our companies expanding their operations outside of the U.S. Borrow cheaply here, invest it over there. Was this what they had in mind? As always, tinkering around with the economy, much like my forays into home remodeling, always leads to unintended consequences that can be quite costly. My favorite quote has to be from Richard Fischer, the President of the Federal Reserve Bank of Dallas in an October 19th speech, “I have begun to wonder if the monetary accommodation we have already engineered might even be working in the wrong places.” Click here for the full article on Bloomberg.
