“The dollar yesterday staged one of its biggest one-day drops against the euro and fell to a 13-year low against the Japanese yen as near-zero interest rates and the Federal Reserve’s plan to print vast sums of cash dilute the value of the greenback,” reports the Washington Post today.
“On Monday, the Fed cut . . . the federal funds rate, at which banks lend to each other, from 1 percent to a target range of 0 percent to 0.25 percent, and effectively vowed to print as much money as it needs to try and pull the United States from a worsening recession.”
“In response, investors are dumping the dollar and buying up other currencies. If the dollar’s fall is unchecked, it could jeopardize the long-term faith of foreign investors in the value of American currency and could cause foreign investors to dump U.S. stocks and other assets,” and cut investment in the U.S.
Foreign investors in the U.S., like Switzerland’s Julius Baer family of mutual funds, have long criticized the Fed’s easy-money policies, which helped spawn the mortgage bubble and financial crisis, and now are destroying the value of the dollar in a vain effort to push back the day of reckoning for years of excessive borrowing that occurred in what Julius Baer calls “The Age of Decadence.” The Fed’s absurdly low interest rates are impoverishing savers and punishing thrift and responsibility.
The Fed’s frantic efforts to bail out the economy by printing money and attempting to inflate the money supply have been colossal failures to date, and some of its bailout measures have exceeded its legal authority. Undaunted, the Bush Administration is now pushing a unilateral automaker bailout that lacks Congressional authorization and construes the financial bailout statute in an unconstitutional manner.
Thanks to his reckless bailout policies, which have exposed taxpayers to hundreds of billions of dollars in losses, and exploded the national debt, Fed Chairman Ben Bernanke will go down in history as the worst Fed Chairman in generations. His record is far worse than even infamous predecessors like Arthur Burns, the spineless Fed Chairman who gave in to Richard Nixon’s pressure to run the printing presses to temporarily prop up the economy to get Nixon re-elected in 1972, resulting in the severe recession of 1973-75 and the “stagflation” of the 1970s.