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April 15: Federal Reserve Chairman Ben Bernanke, left, sits with Treasury Secretary Timothy Geithner before a meeting of the G-20 at the World Bank/IMF Spring Meetings 2011 in Washington.
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April 27, 2011
For generations of Americans raised on the supremacy of the American Dollar and the U.S. economy, a forecast this week from the International Monetary Fund was stunning. It predicted that China's economy will surpass that of the U.S. in five years.
Industrialization and cheap labor in emerging economies, like China’s, coupled with two years of a domestic financial crisis may have weakened the U.S. economy. But some also wonder whether U.S. monetary policies have played a part too.
"One of the fundamental problems with the U.S. economy right now is the Federal Reserve thinks the answer to all our economic problems is printing money," says Stephen Moore, a senior economics writer and editorial board member at the Wall Street Journal. "We haven't created new jobs from all of this printing of money, but what we have produced is inflation in prices."
Printing money, or “quantitative easing” as Federal Reserve Chairman Ben Bernanke has termed it, increases the supply of money but critics say it can potentially lower the value of almost anything that can be purchased.
And, it can devalue the currency -- something that critics contend has already happened. For example, a dollar is worth 11 cents less today against the euro than it was last year.
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