May
17
PPP, Monetarism and the FX Rate, from Alan Millhone
May 17, 2010 |
Euro touches four-year low against dollar, recovers. The euro fell to $1.2237 in early trade on Monday, but then recovered to trade at $1.2307. News Report.
The news says Euro at a four year low. It means little to me, but I do want a super strong dollar. Not for envious reasons, or because I want to buy foreign goods, but because a strong currency goes hand in hand with a low inflation rate, as Gustav Cassel and Harry Johnson taught.
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Even though in the short term weak Euro strengthens the dollar, fundamentally in the long term it’s government spending that determines the strength of the dollar.