No expertise here, but I think currency has less to do with budget surplus and more to do with the relative economic performance among countries, at least when dealing with strong currency.
I gave my policy recommendation to Janet but she asked me not to share it.
The Fed is usually in a no-win situation, and this is no different. They must act with certainty of that which has not yet happened, yet will be judged based on the history of what did happen.
- It is never the right time to raise rates. That moment is either not yet come or already past.
- There are always important constituencies that benefit while others suffer no matter what the Fed does.
- While the Fed has two mandates, they are liable for and judged by a third, which is the misallocation of capital that takes placce when money is too easy for too long.
- Many of the financial issues we face today are due to past policies that attempt to minimize the downside of economic cycles.
- Most of us have benefited enormously from the asset appreciation over the past decade, and decades.
If other policy makers around the world developed and implemented their policies with the same care, skill, and forethought, I think most of the world would be in better shape.