In the short term, can the Fed both cause the dollar to appreciate and stimulate domestic investment?

Question

If so, how? This seems contradictory at face value.

Answer 1

Yes, those to goals are contradictory. All the Fed can do is lower or increase the Fed rate, which in turn (with a  delay)  will increase or decrease the amount of money in circulation.

More money means more investment and consumption, but it also means more inflation, as more money is chasing the same goods.

So the Fed is in a bind.

The only alternative to stimulate domestic investment is lowering taxes. The government has been doing this, but apparently it's not enough to restore the confidence of people.