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US dollar – Fed’s “dirty little secret”
Since Bernanke took office on Feb 1, 2006, the dollar’s purchasing power has fallen 11%, and its down 21% in the past decade and 82% since the U.S. got off the gold standard in 1971, according to Miller Tabak (via Yahoo Finance – The Daily Ticker). “Currency depreciation is always a central bankers dirty little secret,” says Vincent Reinhart, a former director of the Fed’s Division of Monetary Affairs, in an interview with Aaron Task of Yahoo Finance – The Daily Ticker. “They don’t mind some depreciation at time …The trick is to generate some depreciation but not a lot.” Reinhart said: “A design principle of Federal Reserve policy is to get inflation up – to create more dollars so inflation doesn’t fall anymore; that’s associated with currency depreciation. Nothing the Fed chairman or Secretary of Treasury says is going to change that. [But] they’ve got to say ‘a strong dollar is in the national interest’ because they don’t want to be seen as promoting a weak dollar.” Source: Yahoo Finance – The Daily Ticker, April 28, 2011. | |||||||||||
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