Is Ben Machiavelli back? Forcing Asia’s hand…Is it a strategy to drive the dollar lower and lower inflation?

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Maybe on reflection Fed Chairman Ben Bernanke has a plan. We once referred to him as Ben “Machiavelli” Bernanke based on the potential feedback loop of his unprecedented 24/7 helicopter-drop monetary policy. Maybe Ben’s hidden Machiavelli is back.

Interestingly, we all know that inflation is a monetary phenomenon. But what if given the convoluted imbalances in the world economy, this time the inflation call is much trickier.

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Let me try to encapsulate my Machiavellian monetary hypothesis…

  1. We know loose US monetary policy translates direct inflationary pressure to emerging markets (EM), especially to those EMs that peg implicitly, or directly, to the US dollar in order to maintain trade advantage, I am talking about China and Hong Kong, respectively…

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avatarJack Crooks - Black Swan Currency Currents posted Friday, December 14th, 2012.

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