Transcripts of the monetary policymaking body of the Federal Reserve from 2002–2008.

Just to your point on the exchange rate and why we may need to think about this. It strikes me that, because of external demand and our own situation, we have a more accommodative policy than we normally might because of trying to keep domestic demand up, and the result is that it also keeps our demand for imports very high. That means that we as a country accumulate more debt, and as we look down the road, we continue to see this already very large current account deficit growing further. Therefore, we have a greater likelihood of a crisis later as we try to maintain our own domestic demand, given that the rest of the world isn’t helping us along. It may be time to think, as you are saying here, about the external side in terms of the exchange rate. We can’t predict the future; I recognize that. But all the indications are that this problem is building and that the likelihood of this future crisis is building. Because of our need to maintain strong domestic demand, we continue to put liquidity out there, and the world continues to accumulate our debt. This future problem is building in part because of our policy and the fact that we are dealing with one policy instrument right now.

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