In this column in the Wall Street Journal, Stanford’s Ronald McKinnon explains what I have for so many months been trying to explain about the need for a stronger dollar. The key line is that if we were in a closed market, interest rate cuts would help, but in a worldwide market in which investors are fleeing the dollar, the rate cuts cause even more flight from the dollar, which sets up a vicious cycle. It’s all rather counterintuitive, but McKinnon explains it quite well.
