U.S. policy makers are flooding the world with an extra $8.5 trillion through 23 different plans designed to bail out the financial system and pump up the economy. The decline shows that the increased supply of money may be overwhelming investors just as the government steps up debt sales, the trade and budget deficits grow and de-leveraging by investors slows.
“The dollar will go to new lows as the U.S. attacks its currency,” said John Taylor, chairman of New York-based FX Concepts Inc., which manages about $14.5 billion of currencies.
Pumping out dollars - inflation - will result in higher prices and more debt to keep the economy from tanking. This policy is not sustainable. All debt must eventually be either repaid or renounced - the former seems unlikely and the latter would be disastrous.
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