Soon to be as worthless as Confederate money....

It Is A Race To The Bottom For Global Currencies And The Winner Will Be Gold

This is not a good time to have faith in paper currencies - particularly the U.S. dollar.

Already the dollar has been slipping substantially and the Federal Reserve has not really even cranked up the next round of quantitative easing yet.

One of the easiest things to do when there are economic problems in a nation is to pump more paper money into the economy. More paper money gives people something to spend, it spurs economic activity, it helps exports (as described above), and it helps put people back to work.

Of course it also destroys the value of the currency, but we will get to that in a minute.

With millions upon millions of Americans out of work, and with millions of homes being foreclosed, and with poverty statistics soaring into uncharted territory, it is very tempting for our politicians in Washington to borrow even more paper money and to pump it into the economy in an attempt to get things going again. But right now an election is coming up and the Tea Party has raised such a ruckus about government debt that there isn't much appetite for more "stimulus packages" right now.

Of course the truth is that "stimulus packages" never solve any of our long-term problems anyway. The reality is that they just give our economy a short-term "high" and make our long-term debt problems even worse.

Not that the U.S. government is not quietly up to some monkey business. On Friday, federal regulators announced a 30 billion dollar bailout of the nation's wholesale credit union system.

Another bailout?

Just what we need, eh?

But in general, the U.S. government is not doing a whole lot more reckless spending right now.

However, the Federal Reserve can inject more paper money into the economy without the help of Congress. Under the guise of "quantitative easing", the Federal Reserve makes up money out of thin air and pumps it into the economy by buying up U.S. Treasuries, mortgage-backed securities or anything else that they feel like buying.

So is this going to happen again any time soon?

There are all kinds of whispers on Wall Street that this is exactly what the Fed is going to do and that it is going to be massive.

And quantitative easing would probably stimulate the U.S. economy in the short-term.

However, it would also seriously damage the value of the U.S. dollar.

You see, the truth is that when more dollars are introduced into the system, the value of each existing dollar goes down.

It is called inflation, and it is a hidden tax on all of us.

Link:
http://theeconomiccollapseblog.com/archives/it-is-a-race-to-the-bottom-for-global-currencies-and-the-winner-will-be-gold