Intervene Already!

Alexis: I couldn't have written this article any better! Bernanke has been keeping rates artifically low and it's having a devasting effect on the dollar. As for our energy problems, I think it's quite apparent who in Congress is contributing to the high energy prices and who isn't. Until every American wakes up and starts voting out all these politicians who are being bought and paid off by the environmental groups and are against Big Oil drilling our own natural resources, then the American people have the government they deserve. WAKE UP PEOPLE!

Absolutely correct. And the linkage between dollar value and oil prices is 100 PERCENT! If we can raise the dollar by 25% then crude futures will decline 25% in lockstep. With U.S. demand already destroyed by nearly 10%, shine the light on speculators, agree to open the continental shelf to exploration and crude prices will drop back to $70 per barrel. And all of this can be accomplished in a matter of 2-3 months if our politicians had the backbone. Both political parties must recognize the very existence of this nation is at stake and more important than staking out positions for the fall election.

Um, debt markets control rate changes. The Fed merely follows them like a leashed dog moving its benchmarks in-line. When the markets signal it's time to raise rates again as they've been doing, there's only two ways the Fed can refuse to follow. The first is to allow the stockmarket to severely correct which will scare investors into buying treasuries pushing yields down. The second way is to pump extra cash into the system which will cause prices to inflate worse than we've seen already. The Fed created different credit lifelines to help our financial institutions from failing. Although they try to keep a reign on the overall net amount system-wide, some of this has been ending up in commodities markets driving them upwards. It's one way banks have been using to help repair balance sheets. What has been kicking the crap out of our poor dollar are things like: the growing deficit, stimulus package(s), BSC bailout, Feds accepting questionable loans as collateral, interfering with the housing/credit bubbles correction, raising ceiling on conforming loans, etc. Any spending not covered by taxes collected is borrowed by selling treasuries. Buyers of these instruments have started signaling they want higher interest rates to offset rising inflation expectation and an increasing risk of repayment failure. If officials aren't careful, we could end up with guido rates for our treasuries like seen in the early '80s and in some third-world countries. Think about it. How much interest would you charge to loan money out for say a year or more to a borrower who plans to blow it on some drunken party or believing real inflation is probably twice what the government stats report? Whenever the world wakes up to the fact that many other countries are in far worse trouble than the US will be as the huge credit/housing bubbles continue to deflate, we'll probably see the dollar strengthen against other currencies even if our officials continue on with irresponsible behavior.

I agree with Nate B. I might not be completely right, but the cutting of interest rates is one of the main reasons that the dollar has dropped. Also, the cutting of interest rates has partial effect on the prices of gas. If I remember right, the crude oil is purchased in dollars. If the dollar weakens, we pay more dollars for the same amount of crude oil. So, let's raise the interest rates quickly, please!! However, I am not sure if this will help anymore.

there is no bottom in sight for the dollar. it's going to get ugly for this country soon. protect yourself. buy hard assets while the dollar is still worth something. inflation favors debtors, and we are a nation that has lived on borrowed money way too long. eventually creditors will stop lending when they realize they are getting paid back in monopoly money. we are in for a massive correction in our debt bubble false prosperity.

Thank you for preaching what we expatriates have been saying for years now. We've felt the crunch for a long time, and the old arguement about American products looking attractive with weak dollar has two flaws: America doesn't produce much in comparison to 50 years ago (Thank you NAFTA). And, a weak dollar causes inflation, negating any benefit to boosts in American production, due to rising production costs. So, can we finally close the book on the weak dollar arguement once and for all. While we're at it, can we do the same with trickle-down economics??

THANK YOU ALEXIS! Finally, it is good to hear you supporting the Dollar. I like your idea of the US buying back some bills but I don't think that will be enough. Last fall Ben Bernanke went crazy and started cutting rates and now we have to either deal with the side effects or do something about it. Cutting rates to bring housing back certainly has not worked as fast as Wall Street was hoping and now instead of consumers thinking about purchasing homes, they are worried about being able to purchase gas. Commodities are much more important in relation to our GDP growth than housing is. Let's concentrate on getting the value of our currency back in check, then see where we are from there.