Whether the U.S. Federal Reserve Board can turn the US. economy around by greatly reducing interest rates and adopting “unorthodox methods” is yet to be known. However, these measures have significant risks: the return of inflation, government interference in the independence of the Fed, and the Fed may suffer loan losses.
According to Hong Kong’s Wenweipo, “unorthodox methods” means that the Fed will play the role of the final borrower and will inject funds into the market on a large scale using innovative financial tools. In other words, the Fed will fully exercise its function as a “money printer.”
Yet a large-scale injection of funds would increase the Fed’s debt, which could lead to the markets being inundated with U.S. dollars, thereby devaluing the dollar. Devaluation of the dollar might benefit the U.S. economy on some level. Yet from a global market standpoint, it would certainly intensify the blow the financial crisis is dealing to other economic entities, and it would cause other countries to lose their confidence in American investments.
The U.S. economic recession is severe, and the Fed is taking the most radical action in the history of the U.S. Central Bank — Federal Reserve Board Chairman, Ben Bernanke, is putting all his eggs in one basket by reducing the interest rate to almost zero, and exhausting all other options.
London’s “Daily Telegraph” pointed out that if the global economy really can recover through these measures, then the U.S. government will have to quickly raise interest rates. Otherwise, after the recession and deflation have passed, an inflation storm will occur. Inflation would be a negative factor, eroding the dollar’s value. RBS Greenwich Capital chief international strategist, Alan Ruskin, noted that the Fed is truly playing with fire.
this is not a recession but a decline of wealth for a nation.
it has been occuring for over 40 years.
some americans work two and three jobs to try and maintain their standard of living and even that approach is running out of steam.
it is the end of an era in america.
maybe it will slow america’s desire for wars for profits and desire to maintain a mega military budget.
americans have become imperialists and dont have a clue they are.
the price of imperialism is high. we are now experienceing the high cost of imperialism.
ie economic decline for a nation.
politicans wont tell americans it is a decline of wealth they want to get elected.
americans would kill the person delivering the message. it is called denial and americans have it big time. used to being a superpower cant give it up. ego thing.