The idea
Borrow in a currency with low interest rates, lend in a currency with high interest rates.
The image
Photo by Patti via stock.xchng
The question
Am I wrong?
The carry trade — almost wordless
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Except most of the time you get the cheese. The carry trade has been remarkably fruitful, even considering the periodic crashes.
http://www.nber.org/chapters/c7288.pdf
Steven,
Thanks for adding the reference.