If the Fed allows the dollar to fall, we’ll have more exports, but imports will become more expensive, raising inflation even more. We are a consumer society, so keeping a lid on prices means keeping the dollar strong to keep down import prices.

A strong dollar is also needed to keep investors buying our bonds. If bond investors believe we have a strong dollar policy, they will buy our Treasury notes.

I think the Fed must raise rates again.

I really get a kick out of Ben. He’s trying so hard to be more transparent, so he wants to be upfront and acknowledge that he is serious about fighting inflation. But his words come out wrong.

He says, “We’re worried about inflation”, to mean he is taking it seriously and give the markets an inkling it’s enough of an issue to warrant another rise in Fed funds. Instead, the markets think he is worried, concerned, out of control of it. Inflation is raging, the thinking goes, so the markets sell off.

“Earlier this week, Mr Bernanke said that the central bank was worried about the rate of inflation, prompting a global sell-off in equities as investors worried that interest rates would have to rise to keep a lid on price growth.”

A global sell-off, just because Ben is worried about inflation. I think it’s about time he worried. Inflation has been raging for years. Why start worrying now? Why didn’t he worry last year?