Quantitative easing (QE) has helped spark the world's currency wars, says economist Stephen Roach of Yale University, who is a persistent critic of global QE.
"The currency bogey has been a big source of instability in the world," he tells
CNBC. "QE is negative for currencies. It was negative for the dollar. It was negative for the yen, and now it's negative for the euro. That's pushing the dollar higher."
The greenback hit an 11 ½-year high against the euro Friday, and it's close to a seven-year high against the yen.
The dollar's ascent hurts U.S. corporate earnings, Roach notes, by making their exports more expensive in foreign currency terms and making their revenue earned overseas worth less in dollar terms.
Interestingly enough, unlike some other experts, Roach doesn't see China having entered the currency wars.
"It's not in their best interest to reverse the policy at this point in their reform campaign," he explains. "To go to a weaker currency would undermine the purchasing power of Chinese consumers. It would inflame protectionist sentiment in the U.S."
Adam Davidson, co-founder of NPR's "Planet Money," puts a different spin on the dollar's strength.
"The leader of the Fed has had two legal mandates: to keep the dollar's value stable and to maximize employment," he writes in
The New York Times Magazine.
"[Fed Chair Janet] Yellen is doing the first part of her job so well . . . that she's hampering the second part, the one about more of us having decent jobs."
Davidson is concerned about corporations' $659 billion of bank deposits, money that isn't being used for investment. "Entrepreneurship is flat, the percentage of Americans starting new businesses is near a 20-year low," he writes.
"Venture capital, often seen as the most vibrant part of our economy, collapsed in 2000 and has barely budged upward since."
It's an interesting argument, but it seems quite a stretch to blame the dollar's strength for those woes. Most analysts say they are the result of fundamental problems with our economy rather than a currency issue. Most experts also agree that the dollar's recent rise reflects the economy's strength.
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