Yesterday, the Federal Reserve and several of its foreign counterparts announced a plan to increase ‘liquidity’ and ease the ‘global credit crunch.’ This is in response to European banks’ increasing difficulty in raising money for their day-to-day operations. So what’s going on is a kind of foreign-relations equivalent of the Fed’s ‘quantitative easing’ domestic money-printing programs and, like ‘quantitative easing,’ it doesn’t actually address the underlying problems. It treats a symptom, not the cause.

The U.S. stock markets surged in response to the announcement, in part because the plan alleviates a little bit of the immediate-term uncertainty being wrought by the European sovereign debt crisis. But that’s not all. You see, when the stock market goes ‘up’ it can do so for two reasons: either the total average value of our publicly-traded businesses has gone up, or the value of the dollar relative to stocks has gone down. Perhaps some investors were reacting to the increased short-term stability; perhaps others were reacting to the associated decline in the value of the dollar. Indeed, the only reason the stock market looks as high as it does even in the midst of a recession is because it has mirrored the inflation rate which, by honest measures, has been hovering around ten percent per year.

So will these moves save the Eurozone currency union, or solve the European sovereign debt crisis, or prevent our own looming debt crisis? No. They, like most previous moves by our dysfunctional Fed, might buy us a little bit of time . . . but only at the cost of the later implosion being incrementally worse than it might otherwise have been. As to the Eurozone, well, there are rumblings among some economists that it might not last (at least not in its current form) for more than another two weeks. The grand experiment, unique in world history, of multiple sovereign states sharing a single currency may well be coming to an inglorious end.