It appears that Federal Reserve Chief Ben Bernanke is set on killing the U.S. dollar.

In a speech given to the Economic Club of Washington on Dec. 7, he stated that the U.S. economy faces “formidable headwinds,” which include a weak labor market and tight credit that are both likely to produce a moderate pace of expansion.

I will say, however, that this did nip in the bud the crazy thoughts that traders got on Friday. You see, on the previous Friday, the non-farm payrolls came out as “only losing 11,000 jobs” for the month and so traders thought that interest rate hikes were coming sooner rather than later from the Fed.

I must say, I laughed when I heard them say that. It’s ridiculous!

But just to remove all doubt, Bernanke said in that speech that “rates are likely to remain low for an extended period.” He’s said this before, but he has repeated it. . . he is dispelling rumors that the Fed could hike rates earlier.

So that was the first jab to the dollar (low rates for an extended period). The next jab from Bernanke came when he stated that “he suspects that the economy will grow below normal recovery standards” then added “and that pace could be around for a while.”

Translation: This recovery won’t be like usual. . . and buckle up, because it’s not getting better any time soon.

So, yeah, only 11,000 jobs were lost in the previous month, but much of that improvement could have come through the hiring of seasonal help. Even if you work as little as five hours a week, part time, you’re considered “employed” at that time by the government.

Also, remember, since the start of the recession in December 2007, there has been over 7.2 million jobs lost! There’s where the real damage lies.

And since we’re not going to swiftly jump back into “job creation” mode like in times past, then we’re not going to get those 7.2 million people “re-employed” as quickly as we have after past recessions.

So I doubt that we find out much more on Dec. 15-16 when the Fed meets again than we found out in this latest speech. The Fed normally doesn’t rock the boat towards the end of the year. . . and the “extended period” that Bernanke spoke of will take us well into next year before we have to think about interest rate increases.

Also remember that the government still has to prop up the economy. It’s not standing on its own two feet just yet! We were reminded of that in that very same speech when Bernanke stated that “we still have some way to go before we can be assured that the recovery will be self-sustaining.”

Therefore, look for stocks as a whole to struggle in 2010. I’ll be in currencies, of course, of the few asset classes that can still prosper in an all-out bear market in stocks!