Historically on the inflation front, the Fed has only had to concern itself with Dollars held Domestically. This meant that the Fed – at any given time in a Domestic sense – could counter-act any Domestically created money-glut by tightening domestic credit, thereby, reducing the domestic velocity [turn-over] of fiat money – hence – inflationary pressures at home.

What has now occurred – IN THE GLOBALIZED ECONOMY – the Federal Reserve has acted in their customary way in the wake of their own reckless monetary excess, by restricting the creation of “new” fiat credit [the CREDIT CRUNCH WE ARE NOW EXPERIENCING]. The problem for the Fed is that the Chinese have “OVERTURNED” or “trumped” Fed policy [by virtue of the staggering amount of Dollars they hold arising from their Balance of Trade Surplus] by extending Dollar Reserve Derived credit to spur demand [increasing foreign velocity of U.S. Dollars] – which has, in turn, led to GLOBAL INFLATION.

Effectively, the U.S. Federal Reserve has lost a significant amount of control of their own financial house and puts their current policies of money printing [aka inflation] at odds with their biggest creditor – CHINA.

The inaccurate, polluted, interventionist and often baseless revisionist economic accounts increasingly served up by the Private Federal Reserve [which is no more Federal than Federal Express and has no reserves], has understandably led to the Fed having an IMAGE PROBLEM:

http://www.financialsense.com/fsu/ed...