Too Big to Fail policy

The currency won't collapse. The last interest rate drop was less than the market expected and the dollar strengthened slightly. It has been as bad as 2.08 to the pound. It's running around 1.98 now. If the FED leaves rates low for six months, allows idiots on SubPrime AR Mortgages to refinance and then lifts rates slowly, the dollar will strengthen. Higher interest rates make US investments more attractive and increase doller investment directly.

Also the UK is starting to realize that the current high value of the pound against the dollar is bad for it's economy. Europe hasn't reacted yet but it will if EADS moves factories and jobs from Europe to the US. europem is insulated somewhat by it's large internal market and by trade with the emerging Russian economy but it will need to move in the next 12-18 months.

Ideal boundries are 1.55-1.70:1 USD/GBP and 1-1.1:1 USD-Euro are where we should be. Right now the weak dollar helps US exports but if suppliers switch pricing to the EURO, raw material prices will screw the economy big time. If the Fed starts raising rates again next summer things should shalke out reasonably. Also a new president who intends to focus on the economy and who has a real plan for Iraq and domestic power will aid market confidence.

Just my :2cents:

Source: http://quotes.ino.com/chart/?s=NYBOT_DX&v=dmax

You think the dollar can continue to devalue perpetually without any serious side effects to our economy or standard of living?

No, bailouts are there to slow the harming effect on an economy. It's not like flicking a switch. If the Fed drops rates one more time and pushes lenders to help idiots with subprimes refinance then in six months they can raise rates to improve the value of the dollar.

Also remember that right now a weal dollar makes US exports cheaper and that is one of the few things keeping this economy moving at all. The plan above must be completed before foreign suppliers start charging for their items, e.g. oil, steel etc, in currency other than the doller. If that change occurs with a weak dollar we're screwed.

Also remember that bailouts aren't simply giving cash away. Bernake doesn't sit there giving a pile of cash to anyone. The FED chares for the money they put into the market and often when investing in broken companies it's in the form of loans and or stock.

When Singapore bailed Credit Suisse out they took $4.4Bn of stock in exchange for the cash. Bailouts aren;t the free lunch the media makes them out to be.