Low Blow

US Interest rates this low are harmful. Investors buy higher-yielding foreign securities (and speculate in commodities) and foreigners borrow in US dollars (not local currency), putting upward pressure on foreign exchange rates. To prevent this, central banks buy US Treasuries to reduce appreciation of their currency and keep their own rates extraordinarily low. Unfortunately, these efforts further lower interest rates, fueling more credit and asset bubbles around the globe.

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