Take off those inauguration beer goggles

"For the United States, a structural tendency for domestic savings to fall short of domestic investment leads to significantly higher interest rates when economic activity picks up speed. Government policy can also affect interest rates and the exchange rate. Large government budget deficits will tend to push up interest rates and the exchange rate. Budget surpluses have the opposite effect. Tight monetary policy tends to raise interest rates and the exchange rate. A stimulative monetary policy has the opposite effect. Recent U.S. economic history has demonstrated the great importance of these fundamental factors in determining the exchange rates path.

"And that's just one tiny corner of the mess. There are literally hundreds of similar Hobson's choices Obama will have to make in them months and years ahead, each an action with it's own opposite and equal reaction somewhere else in the system."  (Full policy paper)

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