That gets the economics of the current American monetary policy dilemma pretty much right.
Asia notwithstanding, America needs to raise its interest rates but to do so would hurt Asian debtors and, by drawing more capital out of Asian markets, worsen the region's difficulties.So here is another monetary-policy dilemma.
Mr King's position of principle crumpled on impact.The monetary-policy dilemma has so far proved less testing, at least for central banks that had looked likely to raise interest rates before the crisis broke.
The Federal Reserve and the Bank of England each face a monetary-policy dilemma: they have to weigh exporters' desire for a weaker currency against the need to raise interest rates to slow growth in domestic demand.
Thus, in the late 1990s, the liquidity trap in Japan has been externally imposed as an incidental, rather than deliberate, outcome of American policies.Taking this long-term exchange-rate expectation as given, consider Japan's current monetary-policy dilemmas.
The issue puts the monetary fund in a dilemma, which some outside experts worry will force its retreat on key demands.
Such a prospect greatly sharpens the policy dilemmas, both monetary and fiscal, that face both the European Central Bank (ECB) and EU governments.Reform or relapseThis week the ECB declared that it would set monetary policy according to three targets: for the money supply, for inflation, and for a mix of other indicators.
A big difference between today and the bubble of the late 1990s is that inflation is now even lower, so the risks of deflation are greater if the Fed gets monetary policy wrong.The Fed's dilemma is simple.
The natural response to that dilemma is pragmatic: monetary policy must be made, month by month, based on a judgment about the balance of risks and how they have evolved.
As Alan Greenspan discovered (twice), cheap money eventually begets speculative bubbles, presenting many Fed chairmen with a dilemma: how to withdraw monetary stimulus without spooking the markets and undermining the recovery.
This is a serious dilemma for the advocates of monetary policy.
