@jcs007, The petrodollar is the reserve currency of the world. When we have problems, everybody feels it.
@chris6137, right idea wrong reason. The FED cannot print money, only the treasury can. And if they did that, the dollar would tank overnight. Things are a mess now because nobody trusts anyone anymore; nobody knows the true value of an investment anymore. Too many people telling too many lies about what they were peddling has caused critical damage to our economy.
Money was created out of thin air, but by the banks. They took on unsound loans and the repackaged and sold them off as AAA rated securities (the safest investment you can buy). The lie is maintained to this day out of fear of crashing the economy.
But everyone knows we’re lying. Foreigners see this as increased risk for US investments and are thus demanding more compensation for the increased risk, which translates to the dollar losing ground against other currencies. And as the dollar loses value, the cost of importing things like oil goes up.
Other countries are losing faith on our economy and rightly so. And until we stop lying to the world, they will continue to lose faith. It’s really as simple as that.