Is the Fed Hurting the Dollar in the Long-Term?

By now, everyone is surely familiar with the measures that the Federal Reserve Bank and US Treasury (under the auspices of the US government) have unveiled to blunt the impact of the credit crisis. The accompanying debate, regrettably, has dwelled on matters of efficacy; in other words, are such measures adequate to stimulate the economy and prevent it from sliding into long-term recession? Only a few analysts have taken to pondering the long-term monetary implications of such policy-making. This is to be expected, since those who call for restraint have always been outnumbered by those favoring bold (and expensive) action. Besides, the Fed has always had critics, namely those who advocate a return to gold standards But perhaps this time is different. In recent memory, the stakes have never been so high, and the global economy has never been so imbalanced. Accordingly, the Fed and the Treasury must be careful that in treating the economic crisis, they don’t inadvertently damage the very foundation of the US economy.