Encima Global president David Malpass says the actions of the Federal Reserve will boost inflation and harm the U.S. dollar.

"Dollar weakness doesn't work at all for economic well-being," Malpass writes in The Wall Street Journal. "The corollary to the Fed's policy of manipulating interest rates downward at the expense of savers is declining median incomes."

It's no coincidence that inflation-adjusted median incomes rose in the sound-money booms of the Reagan and Clinton administrations and fell in the weak-dollar busts during the Carter, Bush and Obama years, according to Malpass.

"When the currency weakens, the prices of staples rise faster than wages, hurting all but the rich who buy protection," he says.

The economy and median incomes would do much better if the Fed said simply that it would set interest rates as best it could in order to keep the dollar's value strong and stable in coming decades, with the goal of attracting capital, maintaining price stability and encouraging full employment.

Obfuscation on the dollar works fine for Wall Street, which reaps billions in profits from the Fed's unstable dollar policy, says Malpass.

“It trades currencies and volatility, and makes a bundle protecting investors from the Fed by selling complex derivatives, interest-rate swaps, even triple-leveraged gold and currency funds pitched on television,” he says.

“After the Fed's statement, markets bid gold above $1,700 per ounce, the latest insult to the Founders' clear intent for the dollar's value to be strong and stable relative to gold and silver over the life of our republic.”

The Fed's status in Washington is unique and practically unassailable, Malpass notes.

“It alone is a colossal self-funder operating outside the congressional appropriations process. Even the CIA and Navy Seals don't enjoy the Fed's unlimited spending power, checked only by its handpicked board and senior leadership.”

Thestreet.com reports that gold prices have rallied almost 4 percent in two days after the Fed announced it will leave interest rates low through the end of 2014 and the door open to more bond buying.

As the Fed commits to a weak dollar policy, gold becomes attractive to investors as a wealth preserver.

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