Finance officials from the U.S., Japan and Europe in mid-March drew up plans to strengthen the U.S. dollar following troubles at Bear Stearns Cos. , Nikkei English News reported, citing unnamed sources.
The intervention designed by the U.S. Treasury Department, Japan’s Finance Ministry and the European Central Bank called for the central banks to purchase dollars and sell euros and yen, with Japan providing the yen needed for the currency swap if the greenback’s value dropped significantly, the news service said.
The three groups, which considered making an emergency statement through the Group of Seven industrial nations, did not stipulate a specific exchange rate for the potential intervention, nor did they detail the amount of money to be used, Nikkei said.
In other words, they were expecting the value of the US dollar to tank. And it still might.
If it does, what happens when the other banks run out of money?
If the banks print money for the US, then what we’ll have is a classic case of the US exporting its number 1 product: inflation (or interflation, as I call it).