"To make matters worse, QE has artificially kept interest rates low. The ten-year Treasury Note is currently yielding 2.55%. How? Well, the Federal Reserve System, through its Federal Open Market Operations, has purchased something $1.5 trillion of dubious, quality assets at par from the banking system. In return, those banks have used the proceeds to purchase high-quality Treasury securities. Banks love it, because they have been able to unload questionable assets at par and receive Treasury securities in return. In other words, the Fed has not only propped up the balance sheets of banks but also assisted the Treasury in monetarizing our federal deficits. So, what is the problem? The problem is that such a policy has weakened the dollar to the point that it may decline another 15% or more. (See the following dollar chart.)"
From the above chart, I stated the target from September 22 would be $22.25 on the UUP. Well, the low, so far, was $22.17 on October 17. The target has been met; however, the the critical mass is still the level between $21.77 to $22.03. With the current Fed policy of dollar debauchery, which includes QE2, we may just see the $21.77-$22.03 taken out. That range would be approximately 7% from the current price of $22.36.
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