By Chris Gaffney, CFA

The dollar moved higher yesterday as Fed Reserve Chairman Ben Bernanke urged Congress for another stimulus package. Yes, Bernanke wants to spend more of our taxpayer dollars to try to keep Wall Street afloat.

"With the economy likely to be weak for several quarters, and with some risk of a protracted slowdown, consideration of a fiscal package by the Congress at this juncture seems appropriate," Bernanke told a congressional panel.

Others at the Fed echoed Bernanke's gloomy outlook, saying that the global credit crisis will chill U.S. economic growth well into next year.

Bernanke is looking to Congress to send out additional stimulus checks in the hope that they will 'prime the pump' and get U.S. consumers spending again.

The government already sent out about US$100 billion in tax rebate checks over the summer to consumers, but consumer spending has struggled since then.

Retail sales fell for three consecutive months through September. Bernanke says the moves to shore up the global financial systems seem to be working, but we now need to concentrate on getting the U.S. economy growing again.

"The stabilization of the financial system, though an essential first step, will not quickly eliminate the challenges still faced by the broader economy," he said. The FOMC which meets next week is expected to lower U.S. interest rates to further stimulate the economy.

You would have thought Bernanke coming clean about the economy’s poor status would force the dollar lower. But Bernanke threw a spanner in the works with his push for a new stimulus package.

The prospect of a new government handout was enough to rally the dollar across the board, because any stimulus package will have a positive short-term impact on the U.S. economy. But the markets continue to overlook the elephant in the room. They don’t seem to care that we are going to eventually have to pay for all this 'stimulus.'

Helicopter Ben is certainly living up to his old nickname!