Reuters) - The U.S. Federal Reserve's journey to the outer limits of monetary policy is raising concerns about how hard it will be to withdraw trillions of dollars in stimulus from the banking system when the time is right http://www.reuters.com/article/idUSTRE7096FE20110111
What? Are you kidding? If and when he dollar loses reserve currency status its game over. 1990 Saddam petitioned OPEC to drop the dollar and trade oil in gold. Present day concerns are escalating. We are engaged in the middle east to ake sure the dollar is used to transact business period.
The Fed has a strong bias against raising short term interest rates since this is bound to push long term yields higher and bond prices down, thus decreasing the value of their bond portfolio. Basically the Fed is a mess, it should declare insolvency and close down. It's more or less inevitable anyway, just a matter of when.
The Fed has an Excel spreadsheet that it can modify at will to improve its cash balance. This cash can then be converted into any and all assets. The Fed may be shut down, but it is impossible for it to go broke.