What the Fed does on interest rates matters not just to Americans, but the entire global economy -- and that's because the dollar continues to tighten its grip as the world's reserve currency.Foreign investors holding trillions in securities and dollar assets have an incentive to the keep the currency afloat — even when the value of the dollar declines.
It's what Cornell economics professor Eswar Prasad calls the "Dollar Trap."
"The financial crisis had its origins in the U.S., the federal reserve has been pumping huge amounts of dollars into the global financial system, which ought to cheapen its value." Prasad says. "[But] In times of turmoil, the world wants safety, and the U.S. is still seen as the safest place to invest."
So what happens if the world loses faith in the dollar?
Prasad examined several tipping-point scenarios. He found this could result in turmoil for the U.S. financial market, and in turn, spread to the rest of the world.
"The dollar's value is stronger than it ought to be. That means fewer jobs, less exports, so it's not all together a good thing for the U.S.," he says.
Three decades after U.S. troops helped protect a Soviet defector during a firefight with North Korean troops, Mark Deville finally received his Silver Star. His comrades were awarded their medals years ago.
The Israeli-Palestinian conflict includes a shadow war in which Israel turns to Palestinian informants to gather intelligence. Palestinian Abed Hamed el-Rajoub was imprisoned for fighting against Israel, but while in jail, he secretly gathered information from fellow Palestinian prisoners.
Overweight kindergartners are much more likely to be obese by eighth grade compared to their normal-weight peers, a study finds. The solution may be for women to avoid gaining too much weight during pregnancy, researchers say, as well as helping kids get exercise and eat healthy foods.
On Wednesday, President Obama directed the Treasury Department to create a new retirement plan called "myRA." The decision, a circumvention of Congress, follows through on one of the promises made by the president in his State of the Union. As Yuki Noguchi reports, the success of the plan may depend on its ability to move beyond the limitations of existing retirement plans.
Among the many issues in contention at the Syrian peace talks is the possibility of humanitarian relief for cities and villages under siege. No place is in greater need of assistance than the city of Homs in western Syria. One of the first regions to rise up against President Bashar al-Assad, Homs is now the site of an ongoing humanitarian aid crisis. Approximately two to three thousand people find themselves trapped in a disputed district and in increasingly desperate circumstances.
Snow and ice continue to plague parts of the Deep South, including Atlanta and Birmingham, Ala. As Rose Scott reports from Atlanta, city and state officials were surprised by the strength of the storm, and many people found themselves stuck on interstates highways.
Federal Reserve policymakers are wrapping up a two-day meeting as Fed Chairman Ben Bernanke prepares to step down later this week. Investors expect the Fed to stick with its plan to "taper" bond purchases and keep short-term interest rates where they are.
A day after delivering his State of the Union, President Obama is beginning a four-city road trip. He plans to use the trip to push the priorities he emphasized during his address, with a focus on a raise to the federal minimum wage.
North Dakota's oil sector is booming, but agriculture remains the state's largest industry. And while many farmers and ranchers are profiting from the oil beneath the prairie, others complain that drilling is interfering with their business — and changing rural life as they know it.
Meteorologists are used to people faulting their weather predictions. But when Georgia's Gov. Nathan Deal called Tuesday's crippling winter storm "unexpected," he drew responses from several forecasters. One answer came from the head of the American Meteorological Society, who lives in the state.
Scientists know that a small percentage of humans' genes came from Neanderthals. But they were surprised to find that one-fifth of Neanderthal genes are in modern humans living today. That includes genes associated with diseases including Type 2 diabetes, Crohn's disease and lupus.
Scientists know that a small percentage of humans' genes came from Neanderthals. But they were surprised to find that one fifth of Neanderthal genes are in modern humans living today. That includes genes associated with diseases including Type 2 diabetes, Crohn's disease and lupus.
President Obama unveiled the new "MyRA" plans in his State of the Union speech last night. He stumbled a bit over the name, and there's still some confusion about what they'll be called -- some of the folks we talked to are pronouncing it "Myra," like the name. But the idea behind the accounts is simple, according to Karen Friedman, executive vice president and policy director of the Pension Rights Center.
"It’s a starter plan," she says. "It at least enables people to save in a secure, government-backed account."
The new accounts are aimed at low-income workers, who have few retirement saving options.
"Roughly half of the workforce right now doesn’t have a pension plan at work," says David Certner, legislative counsel with AARP. "Which is where most people prefer to save -- by having these monies deducted automatically from a paycheck."
And that’s how the new accounts would work. Employers and their workers have to volunteer to participate in the plan. But once they do, money will be deducted automatically, and invested in safe, government bonds. The initial investment could be as little as $25.
"The little amounts are what end up being the big amounts later on," says Stuart Ritter, a senior financial planner at T. Rowe Price. "So we shouldn’t be poo-pooing the smallness of getting people started."
In fact, the Obama administration already has plans for when the accounts get big. Once they hit $15,000, they have to be transferred into a private-sector IRA.