Friday, January 21, 2011

This news story says the Federal Reserve is planning to use an "accounting tweak" to prevent insolvency. Huzzah! One problem though: While modifying the Fed's accounting strategy may save it from internal trouble, it increases the risk and amount of inflation by allowing the Fed to release more currency into the market. Couple this with "quantitative easing" and with how unlikely the current Congress is to significantly cut spending, and we're seeing no limit to how far the dollar can inflate.

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