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Could the U.S. central bank go broke?

WASHINGTON/CHICAGO | Tue Jan 11, 2011 9:30am EST

With the U.S. unemployment rate at 9.4 percent and only tentative signs that businesses are beefing up hiring, Fed officials, including Chairman Bernanke, see a duty to prevent a further deterioration of economic conditions -- and have signaled a readiness to use all the tools at their disposal.

Last November, as the economic recovery appeared to falter, the Fed said it would buy a new round of $600 billion in Treasury securities through June of this year. That's on top of the $1.7 trillion in Treasuries and mortgage-backed securities it had purchased in response to the financial crisis.

Still, the pitfalls of the Fed's approach are almost as numerous as the lending facilities it undertook to stem the crisis. Perhaps most daunting, the Fed's purchases of Treasury debt and mortgage-backed securities have effectively turned it into a mammoth investor -- a thoroughly undiversified one.

http://www.reuters.com/article/idUSTRE7096FE20110111?pageNum...



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The last paragraph:

"What would the international reaction be if the Fed suddenly had to go and be recapitalized?" said Bob Eisenbeis, chief monetary economist at Cumberland Advisors and a former head of research at the Atlanta Fed. "I don't think that would bode well for Treasuries, or for the dollar, or anything else. It would be embarrassing."

Don't they do that already by moving the decimal point?

The dollar is already dead...

The dollar is already dead... The world just doesn't see it yet.

The Dollar isn't dead. We just aren't using it.

That IS the problem.

In place of the dollar we've been using pieces of paper with the word dollar on them.

A dollar is NOT an abstract unit of account.

It is a weight and measure of silver.