There's plenty of chatter on the net about the "currency war" that Fed chairman Bernanke has started as a result of QE2.
Just keep one thing in mind, the currency war is a byproduct of the main event. The real reason behind QE2 is because government at the federal, state and local levels have too much debt and won't be able to pay it off. Bernanke has said as much. He's printing to flood the system with dollars so that governments will have enough cheap money to pay off there debt.
Bernanke is all about the insiders. He has no concern for the inflation problems QE2 will have on average Americans. And he certainly doesn't care what German Chancellor Angela Merkel thinks. Further, he is desperate to hold together the elitist advantage, which, is indeed starting to implode.
As for real concern about the dollar on international markets, they'll send Geithner out occasionally to state the U.S. is in favor of a strong dollar and Bernanke will text him to remind him to pick up, after the press conference, another barrel of green ink.
"will have enough cheap money to pay off there debt."
ReplyDeleteI think you mean "their" debt, right?
Yesterday, presenting at the New York Society of Security Analysts, FRB St. Louis President James Bullard said, in response to a question by me about the ongoing depreciation of the dollar as a result of QE2, in so many words, that the dollar is the domain of Treasury, and not the FED.
ReplyDeleteHow is that for "passing the buck?" (pun intended).
Best,
Larry Parks
Executive Director
The Foundation for the Advancement of Monetary Education
It's not clear to me what I am supposed to do with this. Please advise?
ReplyDelete