Slashing the Dollar…The Future is Ugly

Friday, October 15, 2010
By Paul Martin

This has the makings of a real donnybrook.

by Mike Whitney
SilverBearCafe.com

The Fed has has hinted that it will launch a second round of quantitative easing (QE) sometime after its November 2 meeting. The anticipated intervention has been widely criticized, but for all the wrong reasons. Fed chairman Ben Bernanke knows that adding another $1 to $1.5 trillion to bulging bank reserves will likely have little effect on aggregate demand. Nor will it lower unemployment now hovering at 9.7%. It will, however, send a message to trading partners (re: China) that the Fed is serious about reducing destabilizing trade imbalances that siphon-off domestic stimulus, increase unemployment and keep the dollar perilously overvalued. In other words, the Fed’s action is the first volley in what is likely to be a protracted currency war that leads to the final demise of Bretton Woods 2.

Here’s a summary of this weekends IMF meetings of Finance Ministers in New York from Bloomberg:

The Rest…HERE

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