My post last month was a proposal for the European monetary authorities to pursue Quantitative Easing, not by buying euro bonds, but by buying dollar bonds. I also presented this idea in a speech at a conference sponsored by the Dallas Fed, April 4, “Why the ECB Should Buy US Treasuries.”
But what if the ECB is told by the international community, especially the US, that it doesn’t want them to push the euro down against the dollar, that it fears a re-ignition of the currency wars? And what if the ECB concludes that it can’t buy US treasuries without US agreement? After all, it was only February of last year that the G-7 Ministers and Governors agreed not to try to influence exchange rates.