http://www.theguardian.com/business/2015/mar/28/rising-dollar-debt-fears-global-economic-crash
This article discusses the effect the rising value of the dollar is having on other countries worldwide. In particular, it notes that it's hurting a number of mid-sized economies that have recently begun/were projected to soon begin major development (South Africa, Brazil, etc.). It also discusses the longer term effects of quantitative easing, including a 40% increase in money borrowed by developing countries. Also stated is the debate/attempts of smaller countries to bring this problem to the floor of the UN, which were rebuffed under the claim that it was the wrong forum (and that that was what the IMF was for). All in all, it is interesting to see the repercussions he implementation of quantitative easing has had on the global economy and begs the question of whether or not it stopped or just delayed economic crises.
4 comments:
Calvin, this article raises some fascinating points. People always talk about changing the global currency from the dollar, but when that debate heats up, the dollar always appears to strengthen. I do think it will hurt development. I want to see how it will impact global US firms.
It is worth noting that Europe has also started quantitative easing in the hopes of an economic rebound as it was quite successful in the U.S. However, their debt well eventually also rise causing more problems globally.
The increasing of the value of the dollar is however beneficial for those countries who invested in our currency early. However if the inflation gets too high it is up to the US to institute contractionary policies in order to keep exchange rates down with struggling economies.
The increasing value of the dollar will be extremely beneficial to American companies looking for FDI opportunities. With the increased opportunities arising in the weight the dollar now carries could drive business out of the U.S. causing the deflation of the dollar to be a good thing and might bring on contractionary policy.
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