What is the value of YOUR money?

Ok, so everyone pretty much understands the US currency system, and what backs the value of that currency. Let me recap with a brief history.

The US used to back its currency by gold. Then, the Federal Reserve backed the currency by printed notes, fiat currency. These notes are called Treasury Bills and are sold to other countries. Many countries buy our treasury bills because the United States has never defaulted on its debt...in other words, it's a guaranteed investment.....

.........that is, until now.

Until recently, the Federal Reserve Bank has held its assets in treasury bills. These are very safe investments, returning an expected interest rate, albeit low, but still expected and safe.

Recently, just in the past week, the Fed has decided to trade Treasuries for bad mortgage backed security debt....to the tune of about $200 Billion. That's $200,000,000,000.00... What does this mean? Well, it means that the Fed now holds mortgages comprised of the following:
low credit scores, zero downpayment, underwater mortgages, adjustable rate mortgages, mortgages that are 30 days late or even in foreclosure. Fun times eh!

So, that means that we've gone from holding Treasuries, which could be printed at whim to now holding a lot of bad US Mortgage Debt. How safe is your dollar? I feel for those on fixed income, or those who have their investments in bonds "because its AAA rated by Fitch and Moody's and...well....it's a bond, bonds are safe!!" ........heheh, really, eh? safe? Ok, you go ahead and think that, I'll go long on commodities and developing countries stocks.

Cheers!