President Bush has signed a law increasing the nation's debt limit to $9 trillion, mainly to finance the wars in Iraq and Afghanistan. The debt limit figure is nine times what it was 25 years ago.
The Federal Reserve last week infused $45 billion of paper money into a banking system stressed because of bad housing loans. That figure is about the same as the Fed put into the system just after the al Qaeda attacks of Sept. 11, 2001.
Europe's basic currency, the Euro, is now worth a third more than the U.S. dollar; and the Canadian "Loonie" continues to strengthen against American dollar.
At a hearing of the Joint Economic Committee, Sen. Charles E. Schumer, D-N.Y., the panel's chairman, told Federal Reserve Chairman Ben Bernanke, "I think we are at a moment of economic crisis stemming from four key areas: Falling housing prices, lack of confidence in creditworthiness, the weak dollar and high oil prices.
"None of the regulators," Schumer told Bernanke, "including the Federal Reserve, are acting quickly or boldly enough to deal with the risks we're facing."
At the same hearing, Rep. Ron Paul, R-Texas, a long-shot candidate for the Republican presidential nomination, said the Federal Reserve's policy of lowering interest rates in order to increase the money supply was little more than stealing from retirees whose savings are being threatened by inflation.
Bernanke ducked questions about whether the country is dipping into a recession.
Meanwhile, finance officials of China's Communist regime threatened to unload the hundreds of billions of U.S. dollars it has accumulated since the Clinton administration gave China most favored nation trading status. China, the officials are warning, will henceforth invest in "stronger" currencies like the Euro.
Peter Morici, University of Maryland economist, said that America's soaring trade deficit, mainly with China, is at the heart of the nation's credit crunch and the devaluation of its dollar, which increases the threat of inflation. Some estimate that China's deliberate undervaluation of its currency gives it a price advantage over American goods of more than 40 percent.
-- Douglas Turner