Fed is fighting US war vs China: report

Reviewing Federal Reserve chairman Ben Bernanke's speech in Frankfurt today, bank analyst Richard X. Bove (currently of Rochdale Securities LLC) concludes that critics who think Bernanke is trying to inflate the US economy miss the point.

"It is a currency war," Bove wrote in a report to clients today. He says Bernanke is working hard to force a weaker dollar that will change "the trade imbalance" and make US goods cheaper, which would boost demand for US products and create jobs here.

Bernanke spent much of his talk on "a long discussion explaining how China is manipulating its currency and why this creates distortions in the global economy which ultimately hurt everyone, including teh Chinese... Bernanke will continue his policy of pressuring the Chinese by lowering the value of the dollar... It is very dangerous policy because, before the Chinese adjust, the American economy could highly inflate."