Diesel Brothers and US growth, page-4

Oh, not sure why you couldn't just explain that in a few words, instead of make me watch 90 seconds of a video clip.

Its not at all a complex concept, and can be summed up as:

Increased supply of a currency results in devaluation of that currency.

Trouble is, that assumes Australia operates in a currency market vacuum; which it does not.

Our major trading partners - the US Fed, BOE, ECB, BOJ, PBOC - are all also printing money furiously, so it is a bit of a zero sum game.

And this is not a new phenomenon; it has been in train since the GFC without causing any major dislocations on the major currency markets (it is a different story for the currencies of countries with weak structural economics, notably many emerging market economies, but that is a separate discussion).

Welcome to the age of Modern Monetary Theory.

But to declare the likelihood of a decline in the A$ as some kind of tailwind for ARB is a bit of a long bow, and tantamount to being worth little more than guesswork.

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