It seems, unfortunately, that I might have been on to something with this. As I feared, the Federal Reserve is now rumored to be planning to help fund the IMF’s European bailout efforts. This would put it in direct conflict with congressional republicans who are attempting to block the IMF’s efforts. While congressional funding for the IMF can be withdrawn, of course, our government will discover just how little control they actually have over the “Federal Reserve”, a private banking concern.
So, why would the Fed do such a thing? As I speculated, the Fed’s interests are not universally shared by the Federal Government. Needless to say, the Federal Government’s interests are not universally shared by their constituents either, a fact that seems lost on both parties. Regardless, the health and wealth of the nation may depend on the outcome of this battle.
Bernanke almost certainly believes, however rightly or wrongly, that unilateral monetary action is absolutely necessary to prevent a global financial collapse. While I believe he is probably correct, that judgement in no way reflects an endorsement of his solution. The monetary system he will so ardently hopes to save was fatally flawed at it’s inception. And, it needs to die.
Unfortunately, the probable replacement is utterly certain to be worse. This is a classic dilemma. The frying pan to the fire, as it were. Which position should a reasonable man take? Neither, in my opinion. But, beware, things are going to get very interesting indeed.