QE2: The last straw or the best move?

Many years from now when we look back at history, I think this chapter of fed policy may be seen as one of the greatest blunders or greatest move made by a central banker.  


Lets start with the dollar. 

The quantitative easing that has already taken place has had a real effect on the dollar. Many believe that with this second round of QE we will have a major currency crisis by next spring. 


Even if QE2 works I believe we have seen the end to the dollar being the worlds reserve currency, and unless the Fed has everything go in its favor the dollar may very well be doomed to follow every other fiat currency in history into the hyper inflation and total devaluation category. 


I'm suggesting to everyone that will listen to hedge their assets. Some are suggesting abandoning the dollar betting that the central bank is going to destroy it and its purchasing power. Many believe its no longer safe to hold cash. I'm a believer that diversification is the only free lunch. 


I would bet that most financial advisers would say buy stocks, but soaring inflation will destroy profit margins and the market will struggle more and more as it becomes more difficult to predict future value of dollar denominated assets. The only bright spot will be in commodities. As the dollar loses value more and more countries and firms will be moving away from their dollars and will use them to buy our commodities. As the fed weakens the dollar the better the fundamentals will become for precious metals and other commodities.  Gold itself is now entering the parabolic phase of the bull market. 


I really do doubt if we'll see sub $1300 gold for at least 20 years. All we can hope for is for the fed to pull off a miracle and accomplish a "soft landing." We need the dollar to lose value in an orderly fashion. The only way out of our current debt is through the devaluation of the dollar. A soft landing will bring this about over the next few years. If on the other hand it does not stay orderly things may become very difficult for the average American very quickly. You should expect assets to rise and the purchasing power of your money to decline. Expect everything to become more expensive. Its long been said that at least 10% of your assets should be in precious metals, its is quite possible that one will wish it had been more.