Market is not paying much attention to S&P warning shot on US debt rating and as usual politicians are still busy playing this news to their own political advantage. In fact, the zero rates, massive debt increases and wilful destruction of US dollar is not to benefit general public at all rather it shows the incompetency and hunger to stay in power or come to power at the expense of public at large. However, putting it bluntly, current administration and central bank officials are doing worse for the public of USA than dictators in the middle-east. In order to win the public votes, administration and central bank is solely focused on unemployment numbers and is running a devastating experiment to destroy the legacy that was hard earned by this nation's forefathers through the investment of their enormous labor, time and money over generations.
And here comes an ignorant and obviously stupid scholar named Ben Bernanke who wants to run a research experiment to corroborate his own faulty research on the Great Depression era even though that experiment is going awfully wrong.
What Bernanke is trying to do is playing a self-defeating game of trying to make the US economy competitive by competing on the grounds of devalued currency. I call it a self-defeating game because:
1) If Bernanke thinks that the only advantage that emerging economies have is their lower currencies then he is awfully wrong. China and India have immense population overall (3 times that of USA) and now more technical and educated population than USA as well.
2) Jobs are not created by devaluing the currency. Companies will keep their operations where cost of raw materials and other inputs is low and more importantly right inputs (like trained man power) are available. Also, inherently, companies tried to produce where their customers are to keep overhead costs low. In the long run, with devalued US Dollar, more profitable customers will be elsewhere and not in USA.
3) Lower dollar will force people to move their assets outside and in more profitable countries where interest rates and investment returns are higher. This will become a self-sustaining cycle putting immense pressure of US dollar which will be nearly impossible to break once it sets in.
4) Even if unemployment goes down due to these misplaced policies in the country, general public will not be better off in any way. In fact, it will have the negative effect of hitting the consumers most thus defeating the purpose in itself.
The best approach now is to start normalizing the rates and restore some credibility for the US economy and US Dollar so that local companies can maintain their buying power and make better investment in future technologies and ideas that have traditionally been the source of strength for the economy.