The FED has massively increased the monetary base 40% over the last year and is on its way to owning over $3.2 trillion in assets. Gold and the dollar are reacting. Dollar Crash? The US Dollar contines to get pummeled. You have to pay for it somehow? Ben Bernanke is devaluing the dollar in an effort to get people to buy financials and real estate rather than fixed income assets. Gotta spend some to get some: Obama economic stimulus plan may reach $1 trillion http://www.nydailynews.com/news/pol...gotta_spend_some_to_get_some_obama_econo.html
You usually don't hear about a currency crash in a deflationary environment, but there are so many ways to define inflation and deflation... The deleveraging is destroying dollars, but is the Fed "digitally printing" them back at the same pace, faster? If the markets are destroying the digital dollars (re-accounting them) then maybe its value that shouldn't be there in the first place. I guess as long as China and others continue to buy our debt, the dollar will hang on by a string.