Video from Resistance Networks
In this CNN interview Senior Fellow Liliana Rojas-Suarez argued that the Fed's recently announced expansionary monetary policy (QE3) is a response to the lack of action by the US Government and Congress to solve the real problem facing the US: the country's fiscal and debt positions. While not ideal, the Fed's policy is an attempt to improve consumers' expectations who have become highly risk adverse in the face of large uncertainties both in Europe and in the US.
Liliana explained that, in contrast to events in 2010, this time around the effects of the Fed's policies will have less adverse effects on Latin America and other Emerging Market Economies. The central reason is that these countries' current economic cycle is one characterized by declining economic growth resulting from a reduced global demand for their products. This in turn is the result of a global slowdown that includes advanced economies and China. In Liliana's view, to the extent that the Fed's actions can improve markets' confidence, the positive effect--however limited--on US aggregate demand will offset the adverse effects on currency appreciations in Latin America and other economies.