"The other great casualty of the Fed's blunder has been the global dollar bloc. ... The collapse of the dollar bloc, if it continues, will add to this exchange-rate volatility and in the worst case make it easier for beggar-thy-neighbor currency manipulation. ... As the world's most important central bank, the Fed must take the lead. And the way to start is by sending a message that its monetary decisions will be based on a renewed determination to protect the value of the dollar and its role as a reserve currency", Editorial, WSJ, 26 January 2008.
"In recent months, the noisiest criticism of the Fed has come from Wall Street. ... Of course, the Fed doesn't think it was surrendering to critics. Instead, it was trying to avert a financial stampede. ... The Fed's first responsibility is to keep inflation at low levels because, without that, its other goals of maximum economic growth and low unemployment become impossible", Robert Samuelson (RS) at http://www.washingtonpost.com/, 29 January 2008.
Amen, AF, well-said. Anyone who doubts gold is money should ask: why did Nixon "close the gold window" in 1971? Why does Uncle Sam hold 261.5 million ounces of gold? What is gold? MONEY! In "capital market line" terms, GOLD, not Treasury Bills, is the: least risky asset. Least risky asset, not riskless asset, there ain't no such animal! As Americans we are conditioned to believe there is a "riskless asset", but that is because like Pavlov's dogs we were brought up to think in dollar terms, not gold ounces. See also my my 24 December 2007 post.
How would the WSJ have the Fed send "a message"? By Helicopter Ben's saying so? That ain't gonna cut it no more. Either the banks fail or the dollar fails.
The Fed has some game going, that 75 years after its formation, RS can still write its, "first responsibility is to keep inflation at low levels".