Fed to scale back bond buying

[Temperament]

Proof that Freedom is wrong:

WASHINGTON, Feb 27 (Reuters) - Below are highlights from the question and answer session of a House Financial Services Committee hearing on Wednesday with Federal Reserve Chairman Ben Bernanke testifying on monetary policy and the U.S. economy.

BERNANKE ON DOLLAR AS RESERVE CURRENCY:

"I don't see any sign that that's happening (the U.S. dollar losing status
as world's reserve currency). The amount of reserves held in dollars is actually growing, not shrinking. I think that reserve currency status at least for the foreseeable future is very much intact."

The world is being held hostage by the FED and their irresponsible monetary policies, Bernanke knows it, and he is not ashamed to exploit it.

Yeah, yeah, yeah, I am wrong. I would look at it this way. The Fed admit the fact that USD is the de facto reserve currency,(denying it equals denying facts) but obviously, the Fed does not take any responsibilities of it. If that's what so called acknowledgement, the world must be full of fools who put their financial future on someone that does not care about them.

The Fed did nothing wrong or irresponsible(it has no responsibility whatsoever to the rest of the world). It is the rest of the world that are fools who trust someone without their interest.

i predict very soon there will be more than one reserve currency in the world. Then what?

[lilvestor]

Proof that Freedom is wrong:

WASHINGTON, Feb 27 (Reuters) - Below are highlights from the question and answer session of a House Financial Services Committee hearing on Wednesday with Federal Reserve Chairman Ben Bernanke testifying on monetary policy and the U.S. economy.

BERNANKE ON DOLLAR AS RESERVE CURRENCY:

"I don't see any sign that that's happening (the U.S. dollar losing status
as world's reserve currency). The amount of reserves held in dollars is actually growing, not shrinking. I think that reserve currency status at least for the foreseeable future is very much intact."

The world is being held hostage by the FED and their irresponsible monetary policies, Bernanke knows it, and he is not ashamed to exploit it.

Yeah, yeah, yeah, I am wrong. I would look at it this way. The Fed admit the fact that USD is the de facto reserve currency,(denying it equals denying facts) but obviously, the Fed does not take any responsibilities of it. If that's what so called acknowledgement, the world must be full of fools who put their financial future on someone that does not care about them.

The Fed did nothing wrong or irresponsible(it has no responsibility whatsoever to the rest of the world). It is the rest of the world that are fools who trust someone without their interest.

You do know that the US dollar was already the reserve currency of the world after the pound failed nearly 100 years ago yeah? The dollar was regarded as a trustworthy reserve because it was gold backed and they weren't running massive twin deficits like NOW, in fact the national debt only started to move up sharply after the US abandoned the gold standard in the 70s (but it really only went parabolic after 2000). So the world wasn't being stupid or foolish by believing in the dollar before all this irresponsible monetary/fiscal policies began, its just that its too late to get out without suffering massive losses now.

[lilvestor]

Proof that Freedom is wrong:

WASHINGTON, Feb 27 (Reuters) - Below are highlights from the question and answer session of a House Financial Services Committee hearing on Wednesday with Federal Reserve Chairman Ben Bernanke testifying on monetary policy and the U.S. economy.

BERNANKE ON DOLLAR AS RESERVE CURRENCY:

"I don't see any sign that that's happening (the U.S. dollar losing status
as world's reserve currency). The amount of reserves held in dollars is actually growing, not shrinking. I think that reserve currency status at least for the foreseeable future is very much intact."

The world is being held hostage by the FED and their irresponsible monetary policies, Bernanke knows it, and he is not ashamed to exploit it.

Yeah, yeah, yeah, I am wrong. I would look at it this way. The Fed admit the fact that USD is the de facto reserve currency,(denying it equals denying facts) but obviously, the Fed does not take any responsibilities of it. If that's what so called acknowledgement, the world must be full of fools who put their financial future on someone that does not care about them.

The Fed did nothing wrong or irresponsible(it has no responsibility whatsoever to the rest of the world). It is the rest of the world that are fools who trust someone without their interest.

i predict very soon there will be more than one reserve currency in the world. Then what?

There won't be more than one reserve currency, the dollar will gradually lose its reserve currency status eventually and all international trade will be conducted in another currency, but this will not happen overnight.

I see no end to America's twin deficit woes, the govt is still spending irresponsibly and they are still importing far more than what they are exporting each year. Neither of these can be good for the dollar.

[freedom]

If the world continue to believe in a reserve currency which does not have the interest of the world, it will just be another USD. Frankly, no central bank would like such responsibility. Everyone wants the benefit, but none likes the responsibility. Honestly, there is no need for such currency if the economy is open and the central bank is sensible. Everyone can trust the counter party to honor their liabilities.

[HitandRun]

Sparks are flying but I am not so sure that forumners are getting their sequence of events correct.

Post WWII, some nations got together at Bretton Woods to peg their currencies to the USD and for USD to be pegged to gold at USD35 per ounce. Central Banks are able to redeem their USD for gold with the Federal Reserve. The IMF and World Bank were also created during this meeting. This is normally referred to as the Bretton-Woods agreement.

When Nixon dropped the gold peg, nations continue to "retain" the practice of keeping their fx reserves in USD which effectively became a reserve currency.

[brattzz]

how come not swiss$?

Just asking, don't flame me! haha!

[freedom]

Switzerland economy is too small. If you are holding a large amount of Swiss francs, what can you do with it? It most likely becomes paper only. On the other hand, Switzerland central bank can't print enough Swiss francs for the rest of the world to use.

Though the USD outside the United States is not large compared to US domestic, it is large enough.

A few minimum characteristics required to be a pseudo reserve currency:

1. the economy backing the currency is large enough, so that the holders of the currency can readily convert their money into goods and services (The United States is the most powerful and large economy in the world)
2. the central bank of the currency is sensible, so that it won't print unnecessary money to cause runaway inflation. (The Fed is the best central bank in the world. Evidently, though the Fed expands its balance sheet greatly, it does not cause runaway inflation.)
3. liquid and huge amount of assets can be bought by the currency for future use. (The US Treasuries)

[Temperament]

Proof that Freedom is wrong:

WASHINGTON, Feb 27 (Reuters) - Below are highlights from the question and answer session of a House Financial Services Committee hearing on Wednesday with Federal Reserve Chairman Ben Bernanke testifying on monetary policy and the U.S. economy.

BERNANKE ON DOLLAR AS RESERVE CURRENCY:

"I don't see any sign that that's happening (the U.S. dollar losing status
as world's reserve currency). The amount of reserves held in dollars is actually growing, not shrinking. I think that reserve currency status at least for the foreseeable future is very much intact."

The world is being held hostage by the FED and their irresponsible monetary policies, Bernanke knows it, and he is not ashamed to exploit it.

Yeah, yeah, yeah, I am wrong. I would look at it this way. The Fed admit the fact that USD is the de facto reserve currency,(denying it equals denying facts) but obviously, the Fed does not take any responsibilities of it. If that's what so called acknowledgement, the world must be full of fools who put their financial future on someone that does not care about them.

The Fed did nothing wrong or irresponsible(it has no responsibility whatsoever to the rest of the world). It is the rest of the world that are fools who trust someone without their interest.

i predict very soon there will be more than one reserve currency in the world. Then what?

There won't be more than one reserve currency, the dollar will gradually lose its reserve currency status eventually and all international trade will be conducted in another currency, but this will not happen overnight.

I see no end to America's twin deficit woes, the govt is still spending irresponsibly and they are still importing far more than what they are exporting each year. Neither of these can be good for the dollar.

i thought the BRIC are trying hard to come to some sort of understanding not to use the reserve currency for inter-trade whenever feasible.
And what about among Asia countries?
i think even some petro-dollar countries try.

Euros seems to be the "back-up Reserve currency" but now what about the RMB?

[HitandRun]

The Fed is the best central bank in the world.

John Mauldin on the Fed:

Fed economists are particularly bad at predicting the future. It's worse than if you and I just flipped a coin. Okay? It's almost statistically impossible to be as bad as central bankers are at predicting the future. And yet we're supposed to trust them when their data tells them and they tell us, "Well, we need to apply this amount of quantitative easing and create this amount of money at this interest rate level. And somehow or other it's gonna magically transform into these economic numbers out here in the future, even though for decades we've been predicting this stuff, and we haven't been right yet."

So it doesn't end well. We have 12 men and women sitting in a room thinking they can manipulate an economy with data they don't truly understand and that they can't actually measure with tools they're making up as they go along.

Forbes

Carmen Reinhart on Financial Repression:

Reinhart

And Greenspan's famous quip that he can't spot bubbles until after they burst and many many more...

[godjira1]

John Maudlin's book "Code Red" is one of the best books I have read on the whole QE thingy.

Maybe a bit sensationally written (ok, more than a bit) but basically the underlying premise is that we are running a huge monetary experiment that will need astute judgement to meter and pull back at just the right times. And the Fed/BOJ/BOE/ECB have proven to be absolute crap at timing anything… so good luck to us basically.