Is the Greenback Heading for Greener Pastures?

Mr. Market has had one eye on the U.S. Federal Reserve for so long it may get stuck there — which, at a glance, could be fine.

Over the past couple of years the Fed has evolved from a monetary institution trying not to step on the toes of the free market (think Greenspan Doctrine) into something of a cross between a financial watchdog and monetary guide dog. Through its currently highly accommodative policy, particularly its program of quantitative easing, the Fed is attempting to stimulate market and economic activity by effectively lowering the cost of money and increasing the availability of credit. On the other hand, the Fed is also trying to make sure that all this easy money doesn’t inadvertently inflate the very same asset bubbles whose collapse contributed to the late 2000s crisis.

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