Fed begins move that could sink dollar
3/25/2009
The Federal Reserve began today to buy longer-term U.S. Treasury securities in a move some economists believe will end up “monetizing” the dollar, a process that could inflate the amount of money in circulation and cause serious devaluation of the currency on world markets.
The move comes the same day U.S. Treasury Secretary Tim Geithner told the Council on Foreign Relations that the U.S. is “open” to a proposal by China to replace the dollar as the world’s reserve currency with a “super-currency” to be created by the International Monetary Fund, or IMF.
The Federal Reserve Bank of New York released yesterday a statement specifying that the Federal Open Market Trading Desk within the Fed will purchase up to $300 billion of longer-term U.S. Treasury securities over the next six months in what amounts to the a government-subsidized purchase of U.S. government debt.
To many Americans, the move appears equivalent to a retail consumer in debt using a Master Card to pay a Visa credit card bill.
Harold
