US should refrain from launching QE3 and tighten its monetary policy to raise the world's confidence in the dollar

In responding to the global financial crisis, many countries adopted extremely loose monetary policies. These policies were necessary to ease their immediate pains and address the global recession, but they have had undesirable consequences in the long run, and for some countries these have now become a pressing challenge.

For the past several years, the financial crisis and policy responses to it have cast long shadows over advanced economies. The overall deleveraging and structural adjustment is far from complete and the repair of private balance sheets still has a long way to go. Even worse, various governments' stimulus efforts to support their economies have resulted in historically large fiscal deficits.