Re:Feds to take over Fannie Mae, Freddie Mac
by richcollins on Sunday September 07, 2008 @03:53AM
(#297384)
It seems to me that allowing them to fail would help the dollar by tightening credit.
Re:Feds to take over Fannie Mae, Freddie Mac
by wheels on Sunday September 07, 2008 @08:27AM
(#297455)
When foreign federal reserves switch their reserve stash from dollars to something else, the dollars are basically "created" on the market as one currency becomes instantly less available and the other instantly more available.
http://www.economist.com/finance/displaystory.cfm?story_id=1...
An extremely oversimplified answer is that it would hurt confidence in the dollar, which would further damage its status as the foreign federal reserve currency, which would cause further inflation in the US.