ScreamBucket

American Federal Reserve Closes Its Eyes, and Pulls the Trigger March 20, 2009

US Dollar Under Assault

The American Federal Reserve Bank has, in a dramatic and radical move this week, put the spectre of inflation back on the table.

Printing over one trillion dollars in American greenbacks is the only approach left to the Fed, and it is taking a tremendous risk that the other major Reserve Banks of the world will follow suit in order to keep the “value” of the US dollar relative to all the others. Without this delicate equilibrium of all reserve banks acting together, the US dollar – the worlds reserve currency – will become diluted alone, causing a collapse against foreign currencies.

A falling USD has tremendous implications for a world pegged to it in every way, with uncontrolled inflation the main horror. While the USD has indeed succumbed to pressure already, billions and billions of dollars worth of wealth around the world is getting nervous, denominated as it is in shrinking American money. Already currencies of nations with strong natural wealth, “commodity currencies”,  are beginning to attract some of this money, which represents a loss of faith in the US economy and the Feds ability to contain the maelstrom.