Ben Bernanke in a recent Q and A at the National Press Club in Washington said;
This statement is not true. Basic commodities like Oil and grain are issued in U.S. dollars. When the U.S. floods the world market with dollars poorer countries are the first to be hit. We are seeing this in the unrest in the middle east. In 1970 Iran saw their purchasing power diminish when the Fed went on another inflationary binge. The iranian people became angry and confused when they saw their pay checks reduced. They revolted then supported the Clerical revolution and the rest is history.
The Fed is financing a vast and rising federal deficit, following a practice that has been a surefire prescription for domestic inflation. Already Walmart is reporting 4 percent inflation in the U.S. this year alone. China and India blame the Fed for their unstable prices. The United Nations, sensitive to poorer nations are suggesting alternatives to the dollar as the international currency. The IMF is proposing replacing the dollar with SRD’s, a combo of currencies, and Bernanke continues to whistle in the dark.