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Why on Earth Would the U.S.
Want the Dollar to Fall?
Here's how I think the current argument goes:
The U.S. wants nothing more than to keep global growth humming ...
In order for global growth to remain on track, they know that China has to keep going gangbusters ...
And for China to keep thriving, they know that Mr. and Mrs. U.S. Consumer must continue shopping. That's because they're still the biggest buyers of China's exports.
Thus, everything still hinges on U.S. consumers!
The Fed knows that lowering interest rates is the best way to support domestic shoppers. Lower rates make it easier for people to keep borrowing and buying.
As happy side effects, those lower interest rates also:
Make money cheaper to borrow and readily available for investment speculation.
Push the value of the dollar lower, which makes things like U.S. stocks look cheaper to foreign investors (see my chart).
Allow large multinational U.S. companies to translate foreign sales back into more dollars.
The sum total of these three forces is that U.S. stocks are likely to go up. That's great since higher stocks also makes U.S. shoppers feel wealthier and more likely to spend, spend, spend.