The gyrations in the currency markets lately have turned into a game of tit-for-tat between the heads of the European (ECB) and American (the Fed) Central Banks. You'd think they were are war with each other, seeking for the dominance of their own central bank and for the title of the world reserve currency for their respective currency. Play nice, guys!Last night, Chairman Bernanke, for the second time in a few days, has talked up the US Dollar, and the currency has risen and responded. This is a stunning development, since in the past, anytime Chairman Bernanke was asked about the influence of slashing rates on the devaluation of the Dollar, he refused to comment, saying that the Dollar was the realm of the US Treasury Department and Secretary Paulson. So what changed that Mr. Bernanke reversed himself and has started to verbally intervene to defend the Dollar? It is because the Dollar's collapse has become so precarious that it is igniting uncontrolled inflation!
