links to the austrian school don't exactly show how recent rate manipulation will "inevitably" produce a bust. financial markets do, in fact, have an ability to absorb a certain degree of imbalance - what austrian economists believe is akin to poisoning the water supply.
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Quote by: rob Expansion of credit through artificially manipulating interest rates (i.e. doing so via extra-market, or political, forces) is effectively the same as simply printing more money, albeit more subtle. The continuing slide of the dollar vs. "competing" currencies (which itself implies the fallacy of mercantilism) is a direct result of an increase in the supply of money, also known as inflation. |
yet, despite increasing rates, the dollar has continued to fall.
U.S. Dollar to Euro Exchange Rate - Yahoo! Finance
there's MUCH more to our currency's decline than interest rates.
as a country with a current account deficit, having our currency fall versus competing currencies causes our imports to cost more - and is a factor influencing inflation.. the one kink in that, however, is that china fixes its exchange rate in order to shield itself from any fluctuation in the dollar - which is why we've seen chinese imports grow even faster in recent years.