Is this why the U.S. Dollar is going down the toilet?

Not being an economist (or even someone who pretends to understand economics) this makes for some pretty hairy reading. From Jeremy Frombach on Oped News:

In a hearing today with Federal Reserve Chairman Ben Bernanke, a figure was brought to light that I was not aware of. As of 2006, the total amount of U.S. Dollars in existence was $10.3 Trillion. As of today, only 2 years later, the Federal Reserve has created over $4 Trillion in new credit, creating a total circulation of $14.6 Trillion.
Hold the phone, a 40% increase in the total US money supply in only 2 years?! Just what in the hell is going on here?! Congress doesn’t know what to do. The dollar is falling so fast merchants can’t even keep pace with their pricing mark ups. Every day gold gets stronger against the dollar, today closing at almost $950 an ounce (it was closer to $300 at the beginning of the Bush presidency) Want to know why gasoline has gone from $1.15 a gallon to an average of $3? To hell with all the examples, want to know why your savings and wages are becoming more and more worthless by the day?
Look again at that figure up top. The Federal Reserve decided to create $4 Trillion new dollars in the last 2 years. That means we’re more wealthy right? We had 10 trillion, now we have 14! Wrong. The pie doesn’t get bigger just because you cut it into more pieces. Here’s the catch- when they create more pieces (ie dollars) all that does is make the existing pieces (your money, your savings, your wages) smaller.

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So, can anyone tell me if this is a crock or has any truth in it?

damien

Damien DeBarra was born in the late 20th century and grew up in Dublin, Ireland. He now lives in London, England where he shares a house with four laptops, three bikes and a large collection of chairs.