Over in London, Fleet Street Daily’s Ben Traynor says the dollar’s recent rally won’t last long.

Foreign governments are increasingly twitchy about holding dollar reserves or maintaining dollar pegs. But more importantly, the Fed has shown that it is more concerned about economic growth and safeguarding the financial sector than it is about inflation.

Ben says that by neglecting the threat of rising prices, the Fed is sending the buck down a slippery slope…

“Who cares about gold? It is the epitome of human stupidity. A metal that is dug out of the ground at great cost to be reinterred in bank vaults as a protection against the same stupidity as caused it to be dug up in the first place.”

Well, well, well! Mervyn King has changed his tune. The Bank of England Governor has been at pains this year to show how serious he is about inflation. Those of us who read the Monetary Policy Committee (MPC) minutes felt we knew which side of the hawk-dove divide King was on.

British Consumer Price Index inflation is running at 4.4% – more than double the Bank of England’s target. But annual input price inflation figures signal that overall inflation may have topped out. The problem is this drop also signals a global economic slowdown, says Fleet Street Daily editor Ben Traynor…

Many investors will want to avoid Russia right now. And they’ll definitely want to avoid Georgia.

I sent a rather aggressive email this morning: Oi! Stop taking all our money!” It was to a former colleague at Northern Rock (NHRKF). I signed it as ‘The Taxpayer’ — a stroke of satirical genius I’m sure you’ll agree… Or maybe not.

Two bits of news illustrate ‘the squeeze’ taking place in Britain. I’ll get to them in just a moment — and I’ll tell you what you can do about it. But first, what is ‘the squeeze’?

“Its economy has grown by an annual average of 5.7% since 2000. And it’s picking-up speed,” writes Profit Hunter’s Manraaj Singh. The IMF predicts that it will hit 7% by 2010. And that could continue for the next two decades.

For most of the last decade the government has trumpeted its economic record. Growth was steady. Prices were stable. Employment was rising. But there was a big problem. At first, the government thought it had solved it. In fact, all it did was bury the problem under a big pile of taxpayers’ money. Now the public finances are screwed up. The government can no longer afford to keep this problem under control. It’s about to hit the economy with a vengeance.

It’s late autumn, 1976. Britain is facing yet another sterling crisis. In less than two years the pound has fallen from $2.40 to $1.60. Investors have no faith in the British economy, or the government that runs it. The Budget is a mess — vital public spending will have to be cut.