From The Daily Telegraph:
The fresh $600bn (£372bn) infusion of quantitative easing announced on Wednesday may or may not provide a lift for beleaguered domestic demand – both Goldman Sachs and HSBC have said much more is needed to escape a real or imagined liquidity trap – but one thing it certainly does do is further debauch the currency. Never before has dollar hegemony been so much under threat.
By flooding the world economy with yet more freshly minted dollars, America further undermines faith in the greenback as an internationally reliable store of value and is thereby squandering an economic and geo-political asset of huge importance to the nation's history.
The dollar's reserve currency status means that America can borrow at will in its own currency from the rest of the world, and at favourable rates to boot. This privilege is being recklessly thrown away.
Every time the Fed prints more dollars to fight the domestic recession, it further devalues that debt. The lenders are understandably getting restless.
As is now becoming steadily more apparent, dollar hegemony was a major underlying cause of the crisis, for it allowed America to go on an unrestrained borrowing binge; the developing world is ever more minded to think its demise part of the solution.
The Fed is taking a massive gamble with America's long term future by blindly pursuing further monetary stimulus; it may take time, but the dollar's all powerful reign on the world stage is drawing to a close.
And they wonder why US business remains in a state of paralysed shock. Policy seems hell bent on destruction.
In Obama's defence, it is usually said that the economic legacy he inherited was so poisonous that it was never likely to be easily fixed, and there is no doubt much truth in this contention.
But rather than focusing like a lazer on the economic catastrophe unfolding before him, Obama instead embarked on a wildly ambitious, disruptive and divisive legislative programme that has succeeded only in heaping further uncertainty on already damaged economic confidence.
If ever more mountainous public debt were not deterrent enough to investment and trade, the clutter of futile reform emerging from the White House would have frightened even the most loyal of American investors into inaction.
Stripped of his political authority, Mr Obama can only look hopelessly on as the newly enthused "Reds" suck the lifeblood out of health and financial reform. Hard won at near fatal political and economic cost, much of the president's legislative programme may end up neutered to death.
Read the whole thing here.
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