King Dollar and the Chinese Death Spiral
This is what happened to Japan. It is not exactly a death spiral, but it is very, very bad.
by Ambrose Evans-Pritchard
April 14, 2017
Lake Como, Italy. The world’s leading currency institute is bracing for a dramatic rise in the US dollar as the Federal Reserve rushes to tighten monetary policy, setting the stage for a protectionist showdown and a fresh debt crisis in emerging markets.
Adam Posen, president of the Peterson Institute for International Economics, says investors have badly misjudged the confluence of forces at work in Washington.
They wrongly assume that fiscal stimulus will come to little under Donald Trump, and are equally wrong that Janet Yellen Fed’s will remain dovish as the US nears full employment.
“The Fed is going to be far more aggressive than people think. Our view is that there will be three to four more rate rises this year,” he told me in an interview here at the Ambrosetti forum of global economists on Lake Como.
This would amount to a global monetary shock, all the more so since the Fed is also floating plans to reverse quantitative easing (QE) by ha…
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