12-22-2008, 03:47 PM
The reason this is bad for the dollar is that the interest rate is essentially zero. There is no where else to go, so how are they going to stimulate the economy now?
Bernake's plan is to essentially to buy all this bad debt, mortgages, etc. This amounts to creating money and diluting the money supply in order to kick start the American economy.
This results in inflation and left unchecked (like it has been the last few months) hyperinflation (see Zimbabwe as an example.)
You can't save the economy by printing up money and buying everything up.
Luckily if you have high inflation though it helps if you have a lot of debt. It could help all these people pay for their houses
Bernake's plan is to essentially to buy all this bad debt, mortgages, etc. This amounts to creating money and diluting the money supply in order to kick start the American economy.
This results in inflation and left unchecked (like it has been the last few months) hyperinflation (see Zimbabwe as an example.)
You can't save the economy by printing up money and buying everything up.
Luckily if you have high inflation though it helps if you have a lot of debt. It could help all these people pay for their houses