Fed’s interest rate games could destroy the dollar

Federal Reserve Chairman Ben Bernanke has reduced the key federal funds rate six times in as many months — reducing the cost for major borrowers significantly. This combines with providing $270 million in funding, plus $30 billion in additional guarantees, for JP Morgan Chase to buy Bear Stearns Cos.

“Helicopter Ben” is living up to the nickname he earned after he remarked in a 2002 speech that he would stave off a recession even if he had to drop money from helicopters to do it.

The results of these policies have been destructive. The dollar is collapsing not only against foreign currencies — we’re now at par with the Canadian dollar and rocketing toward a 2-1 deficit against the Euro — but also against commodities. Gold was passing the $1,000-an-ounce landmark, silver $20. Even industrial metals like copper and zinc are fetching record prices.

Now, a spike in a particular commodity — say, for instance, $100-per-barrel oil — can be attributed to a shortage. But when they all move dramatically and simultaneously, it’s the purchasing power of our money that has gone down.

In fact, the increasing cost of even the base metals recently prompted Edmund Moy, director of the United States Mint, to propose further debasing the copper and nickel-plated, zinc slugs we call coins by substituting color-coated steel.

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Darker Days Ahead?

Robert Reich warns a recession, or worse, could be coming.

Think the last few days have been bad for Wall Street and the rest of the world’s markets? Hang on, things are probably going to get worse, says Robert Reich, President Clinton’s former secretary of Labor and author of the recent book “Supercapitalism: The Transformation of Business, Democracy and Everyday Life.” According to Reich, who currently teaches public policy at the University of California, Berkeley, the United States might even be headed toward a depression.

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Reich: 'Now we have a mess on our hands. Bernanke has the only
       pooper-scooper in town, but it is too small for the job.'

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Right now, feds might be looking into your finances

Banks tip off government to possible money laundering, fraud

WASHINGTON – Each year, federal agents peek at the financial transactions of millions of Americans – without their knowledge.

The same type of information that raised suspicions about New York Gov. Eliot Spitzer is reviewed every day by authorities to find traces of money laundering, check fraud, identity theft or any crime that may involve a financial institution.

As concerns about fraud and terrorist financing grow, an increasing number of suspicious deposits, withdrawals and money transfers are being reported by banks and others to the federal government. Banks and credit unions as well as currency dealers and stores that cash checks reported a record 17.6 million transactions to the Financial Crimes Enforcement Network in 2006, according to a report from the network, a bureau of the U.S. Treasury Department.

“I don’t think Americans understand that their financial transactions are being reported and routinely examined,” said Barry Steinhardt of the American Civil Liberties Union.

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