The Dollar Must Be In Deep Trouble: Uncle Ben Needs To Talk To You

Thursday, March 24, 2011

It's been a while since the Fed has gone into repetitive mode since the introduction of zero interest rate policy, with FOMC statements only changing in nuances while real inflation hits home hard.
As this may not be enough of a shield in a future of inevitable higher inflation - who would have called 70.37€ oil 'good news' once - Federal Reserve Chairman Ben Bernanke now creates a new platform to table the Fed's view.
According to a stunning Fed press release, Bernanke will make good on his almost decade old vision: to transmit FOMC meetings live, adding more spice to traders' lives. Bernanke's step is not the whole nine yards but a move in the right direction. For the first time in history the Fed will enter into a regular Q&A session, following the ECB which has held press conferences after rate decisions since its inception.
From the Fed release: 
Chairman Ben S. Bernanke will hold press briefings four times per year to present the Federal Open Market Committee's current economic projections and to provide additional context for the FOMC's policy decisions.
In 2011, the Chairman's press briefings will be held at 2:15 p.m. following FOMC decisions scheduled on April 27, June 22 and November 2. The briefings will be broadcast live on the Federal Reserve's website. For these meetings, the FOMC statement is expected to be released at around 12:30 p.m., one hour and forty-five minutes earlier than for other FOMC meetings.
The introduction of regular press briefings is intended to further enhance the clarity and timeliness of the Federal Reserve's monetary policy communication. The Federal Reserve will continue to review its communications practices in the interest of ensuring accountability and increasing public understanding.
As this is a remarkable development one wonders, why?
Well, as there has been no turnaround in any of the crises covering the world it might be that Bernanke senses a need for a lot more explanations of his suicidal money printing policy that will ultimately sink Federal Reserve Notes (FRN) to their intrinsic value.
It won't change much.
The dollar has been toast before unrest in Middle East/North Africa. Japan's triple whammy of quakes, the tsunami and the nuclear disaster will likely prick the Treasuries bubble amid tightening credit conditions as the nation will have to repatriate funds for rebuilding Japan's east coast - as far as it's not radiated and inhabitable for the next couple of thousand years. This adds more pressure on a fiat currency that has already lost more than 95% of its value in the last 98 years.
But the dollar was weak before that. It remains so in an otherwise unchanged big picture of bulging deficits, several wars going bad and a most dire economic outlook where only the government adds jobs.
Bernanke's rhetoric alone will not do the job, I fear.


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