Fed to dollar. Drop dead

dollar sign

Fear of dollar collapse as Saudis decline to drop interest rates.

Saudi Arabia is facing inflation and does not want a low interest rate policy. Thus, for the first time ever, they will not follow the Fed and are refusing to cut rates. This could easily break the dollar currency peg and cause a mass stampede out of the dollar, something which would be disastrous to the U.S. economy.

So, you ask, why would the Fed deliberately crater the dollar? Mish, a registered investment advisor, says he know why.

The Fed is indeed “Hell Bent On Punishing Dollar Holders”. That is the plan. I have been telling people for months that the Fed does not give a hoot about the dollar.

The top three Fed concerns are as follows:

* Bailing out their banking buddies
* Bailing out their banking buddies
* Bailing out their banking buddies

Mish also says, and can document, that quite a few knew in advance what the Fed was going to do because the market started reacting just *before* the Fed announcement on Tuesday. Golly, how cozy.

The only way the Fed can save the dollar is to raise interest rates. But, given their rate cut, they are clearly putting the well-being of investment banks and hedge funds ahead of that of the country at large. The monied class protects its own.