As previously discussed. It’s all part of the overall deflationary scenario from the US federal budget deficit being too small:

Merck said sales in the latest period were reduced between 1 percent and 2 percent due to currency translation.

For the rest of the year, currency is expected to trim between 2 percent and 3 percent from its sales.

12 Responses

  1. At my old company, over half our sales were overseas – so we got killed in 2008 not from the tanking economy, but from the strong dollar…

  2. The vast majority of the electorate will never realize that a strong dollar is a double edge sword. It encourages imports and vacations in other countries and discourages exports and foreign vacationers. The “right” policy would focus on real domestic production and let the FX rate float to what the market demand is.

    1. @Abram Larson,

      How does the unlimited euro for dollar swaps affect this. Wouldn’t the dollar be even higher w/o it, and is so, why isn’t this considered FX intervention.

  3. Warren:

    Any thoughts on the Fed’s potential “sterilized” bond purchase program? Assuming no commercial banks and the Fed is the only bank in the system, I don’t see how an argument can be made that they’ve been printing money. Strikes me that they’re just lending out proceeds from the excess of government spending over taxation without changing nominal private sector financial assets. In other words, the Fed hasn’t printed money. The money was printed when the Treasury spent more than they taxed. Correct? Here’s the article: http://online.wsj.com/article/SB10001424052970204276304577265803925182234.html?mod=WSJ_hp_LEFTTopStories

      1. But can the fed spend beyond that? If all US banks ultimately clear with the Fed, at the end of every day shouldn’t net financial assets (less cash in circulation) exactly equal the total of the cumulative budget deficit and sit at the Fed? In other words, can the Fed increase the balance in a counterparty account beyond the sum total of the deficit?

      2. @Ivan,

        Is it legal for the Fed to buy things for it’s own account?

        Legal or not, could they get away with it? (Or have they, in the past?)

        How about in other countries?

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