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Will Fed Act To Save Dollar With Modest Rate Cut?
Or will Bernanke deliver bullet to the back of the head with biggest cut for a generation?

Paul Joseph Watson

Prison Planet
Tuesday, March 18, 2008

The Federal Reserve will today let its actions speak louder than words and likely deliver a full percentage point interest rate cut, a move that will send the ailing U.S. dollar tumbling further and prove once again that Bernanke and Paulson's "strong dollar" rhetoric is nothing more than hot air.

The only way the Fed can regain any trace of respect is if it resists yuppies' desperate pleas to prop up the artificially inflated stock market and makes good on a promise to support the dollar - by only offering a modest rate cut of 50 basis points.

"Traders predict the Federal Open Market Committee, meeting today in Washington, will lower the overnight lending rate by a full percentage point or more, based on futures prices in Chicago. That would be the biggest reduction since 1984, when Paul Volcker led the central bank, and would bring the benchmark rate down to 2 percent," reports Bloomberg News.

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 A cut of 100 basis points has largely already been priced in as the dollar plunged against the Euro again yesterday and such a move would mean business as usual on behalf of the Fed, signaling further gradual dollar erosion.

However, a bigger cut than 100 points would be the metaphorical bullet to the back of the dollar's head as it already lay prostrate slowly bleeding to death. Oil and gold's subsequent acceleration will make the $110 and $1000 levels respectively look tame by comparison.

Twice last week U.S. Treasury Secretary said that a strong U.S. dollar was in the national interest, before repeating the assertion on Sunday but refusing to implement any particular policies that would support the falling greenback. President Bush echoed his comments in a bumbling PBS interview on Wednesday.

As everyone with two brain cells to rub together knows, when a Bush administration official says one thing, they usually mean the exact opposite - which is why every meaningless "strong dollar" mantra precedes another greenback slide.

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It also doesn't help when former Fed chairman Alan Greenspan is feverishly urging Gulf states to abandon their dollar peg as he did last month.

According to Bloomberg News, traders see a 16-22 percent chance that the Fed will act to completely devastate the dollar by implementing a 125 points cut. Though the safe bet is a 100 points cut, a growing school of thought suggests we could see a more aggressive move.

Whether it's 100 or 125, either amount will once again expose the lies of the "strong dollar" claptrap and underscore the Fed's brazen disregard for the greenback, providing ample motivation for foreign investors to dump vast dollar reserves and end the currency's world reserve status once and for all.



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