Wednesday, August 10, 2011

Dollar Falls on Fed’s Pledge to Maintain Key Interest Rate at a Record Low

What do you think they mean when they say, "Dollar falls..."? It means it's weaker in value. It means your dollar will buy less. It means prices rise. And this is just from Bernanke saying he will artificially keep interest rates low. Wait until the next round of easing begins.

    Bloomberg -

    The dollar tumbled the most in at least 40 years against the Swiss franc after the Federal Reserve pledged to keep its key interest rate at a record low at least through mid-2013 to revive the flagging economic recovery.

    The greenback declined versus the majority of its most- traded peers (emphasis mine) as the Fed said growth was “considerably slower” than it expected and it’s prepared to use a range of policy tools to boost the economy. The meeting came a day after economic weakening and a Standard & Poor’s U.S. credit-rating cut spurred a global stock rout. Commodity currencies recouped losses sustained just after the meeting. Stocks and gold surged.

Take note of the italicized text above. The dollar is always declining, because if the Fed isn't inflating the currency, the smaller banks are through fractional reserve lending. New money is always being created. So even when they say the dollar strengthened, that's only relative to the other major currencies, which are also being inflated into worthlessness - if the dollar rises, what it really means, it declined less than other currencies. Read it all.