The falling dollar is not just a speculator’s plaything. It is the dollar in which almost all Americans’ hopes and dreams are calibrated. Pensions, insurance plans, stock portfolios, bonds, everything we earn and everything we spend, is almost all in dollars.

People don’t learn anything from watching others who do things right; they learn from watching people who make mistakes.

The practice of American financial authorities has been to try to keep the pot boiling by stimulating consumer demand. Trouble was, the economy really hasn’t been doing very well. So in order for consumers to continue to spend, they had to borrow.

The big question is probably this: can the Fed now save stocks, housing and the economy by destroying the dollar?

Are houses a wasting asset, not an appreciating asset?

Americans are going to rediscover the quaint, almost forgotten art of making ends meet. Until recently, ends remained total strangers to each other. They didn’t have to meet because there was so much credit available on such forgiving terms.

Everyone loves a new era! Only two years ago, many thought residential real estate had entered a new era, but the model was the same boom-bust model Florida had followed in the 1920's. One bubble bursts only to puff up another. Now, the bubble du jour is in China.

In dollar terms, the Dow has never been higher. Stock market players feel pretty good. The major Wall Street firms are telling clients that the good times are still ahead. Even Alan Greenspan says the credit crunch is easing off.

Fed Chief Ben Bernanke has left no doubts: the bank will take its lead from Alan Greenspan’s easy money era, not Paul Volcker’s tough love therapy.

Bill Bonner writes that it is hard to imagine how consumer spending can hold up.