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July 25, 2008

Hopkins' Hanke: Dollar could fall further

In his latest column for Forbes, Hopkins Professor of Applied Economics Steve Hanke says the Fed is playing with fire by delivering measly returns to Treasury investors and implying that China, Saudia Arabia and other nations with dollar-linked currencies should loosen their links to the greenback.

But by pushing the onus for high commodity prices onto countries that link their currencies to the dollar, the Fed is playing a dangerous game. If those countries abandon their links to our money, they will have much less reason to purchase dollar reserves and U.S. Treasurys. The dollar and U.S. government bonds will tumble, unleashing higher inflation at home and abroad.
Posted by Jay Hancock at 1:58 PM | | Comments (0)
        

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About Jay Hancock
Jay Hancock has been a financial columnist for The Baltimore Sun since 2001. He has also been The Baltimore Sun's diplomatic correspondent in Washington and its chief economics writer. Before moving to Baltimore in 1994 he worked for The Virginian-Pilot of Norfolk and The Daily Press of Newport News.

His columns appear Tuesdays and Sundays.
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