The Fed's additional inventions are part of the 'new tool box' and unconventional techniques that Fed Chairman Ben Bernanke said most likely would be needed to help the nation cope with its most serious financial crisis since the Great Depression.

Although the Fed's actions announced Tuesday technically are not quantitative easing, they will have that effect, says economist David H. Wang. Quantitative easing involves increasing the reserves in the banking system after the Fed loses the ability to lower the cost of money from an interest rate standpoint.

Monetary Policy Analysis: The Fed's goal is to free up credit in much the same way it has freed up credit in financial institutions via other term auction facilities. The Fed will buy loans backed by mortgage issuers, small businesses, student loans, auto loans, and consumer credit cards, with the goal of adding dollars to these markets.

The danger is that the Fed adds too much money into the system and inflation increases. However, many economists argue that, at least until the economy recovers, the chance that inflation will rise is modest, given the plunge in housing, commodity, and stock prices in the U.S.

Will the dollar continue to decline? That depends. More dollars in supply suggest it should, but if U.S. economic growth resumes at the healthy rate, the attractiveness of U.S. investments, among other factors, may offset the increased dollar supply.