Even the Fed Doesn't Want to Hold U.S. Dollars

The above chart shows the dollar’s performance since the Fed announced its Quantitative Easing program. This chart tells us two things:
1.Americans just got 15% poorer on the world stage thanks to Ben Bernanke
2.A currency crisis is in the works (and perhaps already starting)
Regarding #1: When the financial crisis hit, the Fed realized it would need to keep interest rates low while it attempted to bail out the banks (80%
of the $200+ trillion in derivatives sitting on commercial banks’ balance sheets are related to interest rates).
The problem with this is that it makes Treasuries very unattractive to foreign investors (China & Japan) who want a higher yield. Consequently, the
Fed decided to pick up the slack by buying $300 billion worth of Treasuries through the now famous Quantitative Easing program.
As I noted last week, the Fed is now the largest buyer of US debt (it bought more debt than the next three largest buyers combined in 2Q09). China and
Japan are no one’s fools. And they’re not going to fund a monetary policy that is both profligate and likely to erode the value of their dollar
holdings.
Which brings us to item #2: the coming dollar crisis.
I am not a huge fan of technical analysis, but it is a useful tool for navigating a trader-heavy, liquidity driven, manipulated market such as
today’s. On that note, I want to point out that the dollar began forming a falling bullish wedge pattern starting in June (see above chart). This
pattern entails an ever-tightening range of lower highs and lower lows and typically precedes major breakouts to the upside.
Except it didn’t.
As you can see, the dollar broke down out of this pattern in late September. It then rallied back up into the trading range before breaking down
again. This is bad news. The next line of support (place where the dollar could bounce) is 76. We've already broken that one too.
seekingalpha.com...
What all this boils down to is the US portrays a poor political image and the lack of fiscal discipline and structure. We have seen how easy the US
recession almost caused a global collapse. They tell us we are coming out of this recession. It’s painfully obvious this isn’t the case.
We forget so easily that it was predicted that it would take 4 to 5 years to recover, that things would get worse before they get better.
This recent devaluation of the dollar could eventually cause its demise and send the globe in to total chaos, once AGAIN! Let’s hope this will only
be another Great Depression, rather than a duplicate of Zimbabwe.
Then of course we have the Fed having the privately owned Federal Reserve, which in fact controls the economy, interest rates, inflation, deflation,
Stagflation or worse yet hyperinflation.. Now they are bagging the buck!
Our US dollar will buy a 7.00 cup of coffee in the EU.
I guess we cant whine anymore about the US dollar being king of global trade anymore, it seems old news.
I have truly tried to keep all my conspiracy theories on this issue at bay. What I see is either Greed or a more sinister plot going on behind closed
doors. What will have when we come out on the other side of this?