TSP Center

When times are good and concern builds about elevated prices, it cools things off by lifting rates and tightening credit.

Yet in reality, the Fed is the central banker to the world.

The dollar is the money used most widely as the repository of savings and as the currency for trade. When the Fed lowers rates, it makes the dollar less attractive, encouraging investors to seek rewards elsewhere. When the Fed lifts rates, investors switch gears, yanking capital and selling off other currencies.

evilanne wrote:Interesting article

When times are good and concern builds about elevated prices, it cools things off by lifting rates and tightening credit.

Yet in reality, the Fed is the central banker to the world.

The dollar is the money used most widely as the repository of savings and as the currency for trade. When the Fed lowers rates, it makes the dollar less attractive, encouraging investors to seek rewards elsewhere. When the Fed lifts rates, investors switch gears, yanking capital and selling off other currencies.

For those investing in the I Fund, the value of the dollar may have an impact on returns as discussed elsewhere. The I fund, however, does not include emerging markets. An emerging market fund might be an interesting addition to the TSP Mix as they have performed much better the the EFA over the last 10 years. EEF & VWO are 2 EFTs and IEMFX & NEWFX are 2 mutual funds for emerging markets that you can use for comparison.