Interest rate cut! Great! Ummm ... well, maybe great.

Interest rates were on their way up in the US, in part to stem inflation. You see, if money costs more to borrow, then less will be borrowed, and less cash will be available to drive up prices.

But the subprime mortgage crisis, plus a sluggish housing market, put pressure on the US (and other countries around the world), to put cash into banks to cover credit and debt shortfalls. It also put pressure on the US to lower interest rates so the housing glut doesn't lead to a recession.

And so, interest rates were hacked down .5 percent a few days ago. We can worry about inflation later, I guess some US financial types thought.

But the problem is global. What we do in the US is felt around the world. Lowering interest rates means our bonds yield less to long term investors. We rely on these investors to keep us in cash to run our government, fund our military operations, and much more. We need the cash generated by these bonds.

We also need the dollar to be considered a de facto "gold standard" (pardon me) for currency pegs, to help reduce uncertainty in key export/import pricing.

So it's a bit concerning that Saudi Arabia has not adopted a similar interest rate cut, and is considering allowing its currency to float relative to the US dollar. As this article from the Telegraph (UK) says reports, "This is a very dangerous situation for the dollar," a statement made by the currency chief at BNP Paribas.