Dollar Plunges After Fed Announcement
Plan to flood system with another $trillion-plus could set the scene for dangerous hyperinflation

The dollar plunged across the board on the back of news that the Federal Reserve would flood the banking system with the greenback by buying $300 billion of long-dated Treasuries over the next six months as well as $750 billion more of agency mortgage-backed securities.

The announcement sent the dollar to a two-month low against the euro, with the single currency gaining well over 3% on the greenback. Gold shot up by over $50 dollars in response to the news.

"Bottom line is that the Fed is adding $1 trillion to its balance sheet and that's a lot of taxpayer money," said Greg Salvaggio, vice president for trading at Tempus Consulting in Washington. "Interest rates now are effectively negative across the board. The dollar is selling off because this may contribute to long-term weakness in the currency."

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The move initially sent stocks soaring, but at time of press the Dow Jones was heading south again.

Economic analysts have continually warned that flooding the system with dollars, in addition to cranking up the printing presses, will eventually lead not to economic recovery, but dangerous Weimar Republic-style hyperinflation.

Should the dollar completely collapse, gold would easily top $2,000 and potentially could go as high as $5,000 an ounce or more.

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