The dollar goes up and the gold goes down

When the dollar went up, the markets went down

Mundell says “The US Federal Reserve system and the Secretary of the Treasury made two big mistakes last fall. They allowed the dollar to soar in the third quarter last year – the dollar went up by 30% – and this was damaging to the US and … all those countries that were tied to the dollar, they had bad stock markets over that period. This was due to tight money, which you could prove by the appreciation of the dollar and also the falling price of gold, which went down by about $250 in that period. When those two things come together – the dollar goes up and the gold goes down a lot – then you know that there’s some tightness in the monetary system.”