Sunday, November 7, 2010

Dollar Debauchery

What happens to the world economy when the reserve currency of the world is debased?  The recent QE2 move by the U.S. Federal Reserve is a slap in the face to the rest of the world, particularly the G20 who have been asked repeatedly to "coordinate" their economic strategy with the U.S. by Tim Geitner.  With friends like this, the G20 may ask "who needs enemies"?  (And speaking of non-friends, China is plenty pissed.  All china needs to do is stop buying U.S. debt and this whole house of cards could come down.)  Two results of Ben Bernanke's QE2 policy will be: a) a cry for a new world reserve currency (gold) that can't be printed at will, and b) the recognition by its trading partners that the U.S. can't be trusted (as if anyone who bought subprime garbage from Wall Street thought they could). Once again America, which had a fragile but real recovery underway, has succumbed to "me first" in the aftermath of mid-term elections.  The myopic right wing whackos' demand for an instant recovery (job creation overnight) has once again threatened the global financial system.  This will not end well.