US Dollar Index Clobbered on Leaked ECB Plan

The U.S. dollar and U.S. Dollar Index are getting hit hard today after the "leak" of the plan by the ECB to acquire an unlimited number of bond which mature in 0-3 years.

Ignorant reporters continue to imply there is uncertainty because Germany opposes the plan, but over and over again that has been the positioning of Chancellor Angela Merkel, who attempts to make it look like she's fighting it till the bitter end before caving at the last moment. There is no doubt this plan will go forward officially on Thursday.

This will probably appear to stabilize Europe over the short- to mid-term, but that's not even a guarantee in the contracting economy of the euro zone. It would be more accurate to say that is what will happen in the minds of the people of the world, even though absolutely nothing is being done to address the underlying issues, which is primarily the reduction of government spending and changing of financially parasitic lifestyles of the people living in socialist Europe.

Until that is done, nothing will be changed which will have a beneficially long term effect.

As for the U.S. dollar, it was trading down against the euro, with the euro climbing to 1.2603 against the greenback, a gain of 0.0036 as of 12:16 EST. The U.S. Dollar Index was down to 81.21.

German Chancellor Angela Merkel Blasts Use of "Cheap Money" for Economic Management

Although German chancellor Angela Merkel and the German government has implemented a fiscal stimulus plan, it was an extremely modest €12bn over the next two years. While that was probably a mistake, at least Merkel understands that creating money from thin air won't do a thing to take care of the problem they're in.

Merkel and the German government have been coming under increased pressure to contribute to a huge stimulus in relationship to the European Union; now standing at €200 billion. That would be about 1.2 percent of GDP of the 27 member states.

Talking about the contribution of the drop in value of the U.S. dollar to the current global economic crisis, Merkel stated to the German parliament:

“Excessively cheap money in the US was a driver of today’s crisis. I am deeply concerned about whether we are now reinforcing this trend through measures being adopted in the US and elsewhere and whether we could find ourselves in five years facing the exact same crisis.”

Some analysts assert the action wouldn't do much to change the economic crisis anytime soon. They're of course right, as is Merkel.

History has proven that the utter stupidity of the New Deal did more to create the Great Depression in the U.S. than anything else. Printing money, devaluing currency, and generating inflation is never an answer to an economic crisis.

The best thing to do is let it play out and allow the market correct itself. That cleans out the bad businesses and leadership, and makes the free market much stronger.

Throwing money at poorly run companies does nothing but reinforce poor management and keeps the real problems from being solved. Government interference in what would have been a short period of economic struggle created the infamous Great Depression in the U.S. We don't need to do the same and create a worldwide one.