Senior St Louis Fed researchers argue interest rates have no effects on currencies
An article at the St Louis Fed, which is run by James "the world's worst central banker" Bullard was just released.
It's just a short article but it's an embarrassment. That someone paid a PhD who evidently never spent a day in markets in his life to write that stupidity is a tragedy.
The paper asks if there is any relationship between the 20% rally in the US dollar since the middle of 2014 and the Fed hiking interest rates.
YiLi Chien, who is a senior economist, and Paul Morris, who is a research analyst, determine that the rise in the dollar is a mere co-incidence.
"In reality a higher interest rate may have very little or no effect on the exchange rate, given the strong empirical support of the random walk behavior of exchange rates in the short run," they write.
They cite a single study from 1983 as their research.
You don't have to be smart to get to the top... just the smartest guy in the room.
