I don’t know how many of you are paying attention, but the Federal Reserve is playing with fire.  In an effort to cushion the falling economy, the Fed is making available to the market lots and lots of money.  This is going to help keep the investment firms that have been playing fast and loose with risky instruments from going belly-up, and theoretically going to keep the stock market from beginning the death spiral of decreasing confidence and increasing panic.  But it also runs the real risk of further devaluing the US dollar in relation to other world currencies.  Just like with boy bands, flooding the world with more dollar bills makes each one of them worth a little less.

Now, presumably, (have you noticed how many assumptions we have had to make to get this far?), because consumer spending is down, firms won’t be expanding capital and borrowing from banks and therefore the money will only trickle into the market and we can avoid the devaluation problem.  But I worry that is a big IF, and sets up a gamble with which I am not comfortable.  For if we’re wrong, and the dollar continues to slip, there may come a time that another government (Japan, China?) will buy up all those worthless dollars and essentially own us.  Do we want to risk this so that the recession we’ve been postponing for 7 years can be less drastic than it probably needs to me to make our political system face some of these looming problems that threaten to drown us?

Oh well, at least we still have more nuclear warheads than any other country.  Maybe that will make other world leaders think twice before utterly destroying our economy… sorry, don’t have a lot of time to post, and am worn down enough to let the doomsayers move me to expect the worst.