Originally posted on RealMoney at 10:01 a.m. EST.

Want to get more Jim Cramer? Click here for a free trial to

RealMoney

, where Cramer and others give you the commentary you need to stay ahead of the game.

I am tired of reading that the dollar's decline is a function of our interest rates and their need to decline further on the short end.

The dollar is a referendum on how badly President Bush, Treasury Secretary Paulson and Princeton Professor Ben Bernanke are handling the housing crisis and the economy. The dollar is a repudiation of their lack of creativity, their inability to recognize that the monoline problem plus the housing losses have eliminated the excess capital the banks have to lend, and their insistence that laissez-faire works when it comes to broken markets.

The dollar's decline is a statement that Ben Bernanke will not do what he said he would do in 1992, which is have the

Fed

buy the bad collateral that the banks are stuck with.

The dollar's plummet is a statement that the government would rather give out $600 to those who need it than take stakes in the companies that could have built the capital reserves, the

PMIs

(PMI)

, the

MBIAs

(MBI) - Get MBIA Inc. Report

, the

Ambacs

(ABK)

.

The endless slide has to do with the recognition that the markets are beyond the grasp of the president himself or the Democrats who think the answer is punishing the banks with bank holidays.

The government has to get involved to solve this problem. Without getting the FHA engaged, it makes too much sense to walk away from your home.

The government seems unable to recognize that the issue here is simply the need to get houses to stop depreciating.

Lots of people when I write that say that I favor bailouts, that I favor higher home prices, which are bad, that I want deadbeats helped.

I have to tell you: If you have stuck it out this long in your house, you are not a deadbeat. You are doing everything you can to stay in your home, despite articles that say otherwise. Walking away from a home is a horrible decision, predicated at this point on the need to feed your family. I don't care that the borrowers should have been smarter or the lenders less rapacious. I want to see the glut of homes shrunk and the desire to buy a home not be a fool's game, as it is now.

TheStreet Recommends

Without some engagement by the government, the dollar will continue to fall.

Don't forget, our inflation is mandated by the futile attempts to get ethanol jumpstarted while we put tariffs on sugar and we keep cheap Brazilian ethanol out.

The whole debacle is much more important than the reasons you hear about the decline in the dollar.

Do not forget that if we solved the housing crisis, we could then raise the rates and bring money in. The way to solve it is to give the banks more money to lend -- they don't have it. That's what the

Thornburg

(TMA)

mortgage issue was about. That's what the hedge fund margin calls are about. The banks can't lend because they don't have enough capital.

They are trying furiously to

shrink

their balance sheets so they cannot run afoul of capital requirements, which, because of all the bad loans, they are in danger of doing. By cutting the short rates to well below the two-year mark, you allow the banks to take your deposits, invest in the "curve," make money every day and rebuild capital. You also allow hardship borrowers to refinance from the FHA.

It's the

only

solution.

And it is not happening.

At the time of publication, Cramer had no positions in the stocks mentioned.

Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for

Action Alerts PLUS. Watch Cramer on "Mad Money" weeknights on CNBC. To order Cramer's newest book -- "Jim Cramer's Stay Mad for Life: Get Rich, Stay Rich (Make Your Kids Even Richer),"

click here. Click

here to order "Mad Money: Watch TV, Get Rich," click

here to order "Real Money: Sane Investing in an Insane World," click

here to get "You Got Screwed!" and click

here for Cramer's autobiography, "Confessions of a Street Addict." While he cannot provide personalized investment advice or recommendations, he appreciates your feedback and invites you to send comments by

clicking here.

TheStreet.com has a revenue-sharing relationship with Amazon.com under which it receives a portion of the revenue from Amazon.com purchases by customers directed there from TheStreet.com.