In a speech last week at a central bank conference in Frankfurt, Germany, Fed Chairman Ben S. Bernanke explained the decision to buy the Treasury securities. "Although securities purchases are a different tool for conducting monetary policy than the more familiar approach of managing the overnight interest rate, the goals and transmission mechanisms are very similar," Bernanke said. Both "lead to more accommodative financial conditions, which support household and business spending."
The point is not to weaken the dollar to make U.S. exports more competitive on world markets, but to "deliver the strong economic fundamentals that underpin the value of the dollar," Bernanke said.
Of course, a resumption of robust economic growth and a drop in unemployment might also underpin the reelection of President Obama--so obviously the Fed has to be forced to back off. Right?
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