Beware the carry trade!

With interest rates in the U.S. at historic lows, some economists are worried that Americans involved in the carry trade could drive down the value of the dollar. Senior Editor Paddy Hirsch explains how the carry trade works, and why some people are worried about its return to the markets.

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Thanks so much for this programme. I'm sure even my Mum could understand this!

Dear Manager:
Your website is very user friendly and contains easy to understand information regarding economics/investing.

Please continue to do whatever you guys do to inform and arm us with better educational tools. My favorite is Marketplace Whiteboard. Would love to see more topics on how to analyze industry related stock info. like banks or energy.


I think that those who print the money or sell it, profit from it, regardless whether the money is losing value or not. If the dollar looses value, the people from the other countries, who own trillions of dollars, will lose and America will gain. The bad thing will happen when the people lose faith in the dollar, and stop buying it. Then we can�t buy with mere paper the products other people have produced with hard labor.

Hi Paddy,
I just wanted to ask about two possible topics for one of your next presentations:
1) Adopting Euro for some European countries pros and cons. Or, dollarization in Equador. It doesn't have to be any country specific. Just the idea of adopting another currency and what it means.
2) Explain currency swaps and options (calls and puts)
Thank you,

Hi Paddy. I'm wondering if you could do a whiteboard presentation on gold hoarding and what effect if any this might have on the overall economy. Thanks.

And you have just touched on why the banks got flushed with cash back in the 90s and why credit got so easy. This is an interesting effect of balance of payments in the capital and financial account. Will this boost American exports? Depreciate the dollar and make American produced goods and services cheaper. Will this also cause a deflationary environment in the US? Welcome to the American lost decade. No wonder everybody is saving their pennies. We might possibly have rough times ahead of us.

This was explained very well and very informative.

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