U.S. Markets open in 6 hrs 15 mins

Bernanke Wants a Weaker Dollar, Buy the Euro: Currency Fund Manager

Jeff Macke

Axel Merk, currency expert and president of Merk Investments, thinks the U.S. dollar is going lower -- and it's Ben Bernanke's fault.

The United States has a "Fed that wants a lower dollar" Merk says, offering an opinion that everyone except the Fed accepts as fact. The Fed's goal is to attempt to limit the deleterious impact of the greater than 9% unemployment and the hangover caused by the "Great Recession." In contrast the European Union is looking to strangle the weakness out of the system through austerity. This stereotypically Germanic approach is one of the reasons Merk is an unapologetic euro bull.

"In the Eurozone there's a lot of pain ... precisely because we're not printing and spending money over there," he says. Merk also notes that German exports are booming despite weakness elsewhere. It's a point that leads to the question we've been asking on Breakout for weeks: Why on earth would Germany and other thriving Eurozone nations continue to prop up the "cheaters" (as Merk refers to Greece and other laggards)?

"From Germany's point of view they want to keep Greece," at least in part because Germany has Greek debt in its own banking system. Now Merk goes a bit off the beaten path, saying, "if Greece were to leave at some point, while Greece may fall into anarchy, the rest of the Eurozone would get stronger".

If the pain of austerity is good for the EU, the idea of an entire nation descending into anarchy should make the euro the buy of the century. On the other hand if you're bearish the euro because you believe too much pain is a bad thing, well, that's cool with Merk. The reason he likes the euro "is because everybody hates it."

"Hate" may be a strong term with the euro much closer to all-time highs than all-time lows versus the dollar, but Merk has a point. Or he has enough ideas to catalyze an old-school "U.S. vs. the world" debate. We want to know what you think. Please drop us a comment below or drop us an email at breakoutcrew@yahoo.com.