Video: The Real Risk and Fallout from QE is Still Ahead
• Accommodative monetary policy is implemented with good intention, but it carries negative consequence
• Speculative excess, missallocation of productive assets and currency wars are high profile risks
• Some of the most at-risk to stimulus though are developing markets with key ties to bigger counterparts
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There is opportunity for the FX trader who factors in divergent monetary policy efforts amongst major central banks and projects their bearings. Yet, speculators should also recognize that there is systemic risk in a universal pursuit of easy money. Where stimulus can support growth and inflation while also reducing individuals' perception of personal risk; it also drives returns to extreme lows and feeds a currency war. Eventually, we will likely find the major participants in this effort suffer the fallout. In the meantime, there are plenty of victims outside the core: Switzerland, Brazil, South Korea, Ukraine, etc. We look at the more immediate systemic threats in today's Strategy Video.
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