Fears of dollar being hit by Washington’s $700bn bailout plan

David Smith, Economics editor

THE US Treasury’s $700 billion (£380 billion) plan to bail out the banks could undermine the dollar, economists warn.

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Word of the proposals created a mood of euphoria in financial markets on Friday. But analysts warned of the risks.

Tim Bond of Barclays Capital, while conceding that the rescue was necessary to avoid the risk of depression, said: “The volume of fresh government borrowing and the fast expansion of the Fed’s balance sheet are both negatives for the dollar, carrying a potential risk of increased inflation.”

Other economists also think that the dollar could be undermined. Kenneth Rogoff, former chief economist at the International Monetary Fund and now a professor at Harvard, said: “It is hard to believe that the dollar will continue to stand its ground as the crisis continues to deepen.”

Critics have long warned that a consequence of the debt bubble would require governments to take debt onto their books and “monetise” it, resulting in higher inflation.

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http://business.timesonline.co.uk/tol/business/economics/article4795035.ece

that $145 again.

but we do not..

Funny how everything works out well for the oil companies lately.

will have the mummified visages of Henry Paulson and Alan Greenspan next to it.

"Is that a widow with an annuity I see over there? Grab her purse! Quick! Bring her to me for I and my henchmen must feed."

:puke:

Gee, pumping God-knows how much money into the economy results in INFLATION? Who knew? :eyes:

n/t

reparations for World War I.

Print more Deutschmarks. Pay the debt with "less" money.

Unfortunately the result was hyperinflation. People would try to buy a stick of butter in the morning with a wheelbarrel of worthless Deutschmarks and in the afternoon, the same butter would cost two wheelbarrels. People starved. People had no jobs. And along came Hitler who "saved" the starving German populace. Being so desperate, he sounded good and you know the rest.

Our situation could go a similar path and the country be open to a megalomania with the backing of the banks, and the dictatorship would officially begin.