The chairman of the Federal Reserve was on 60 Minutes last night explaining how the Fed uses a computer to print money.

According to Ray Dalio, CEO of Bridgewater Associates, the economy will need to go through a debt-restructuring process. In order to do this, either debt-service payments will need to be brought down so they are low relative to incomes, or, incomes will need to be raised by printing a lot of money.

It isn't complicated, he said. It is the same as all bankruptcies, but when it happens pervasively to a country, and the country has a lot of foreign debt denominated in its own currency (as does the U.S.), it is preferable to print money and devalue.

That's pretty much exactly what Mr. Bernanke has been trying to do-devalue the currency. Unfortunately, the market has not been cooperative in this endeavor so far, but that could be all set to change.

CBS explained that the Fed has been buying all sorts of credit instruments, ratcheting its balance sheet up by over $1 trillion in the process. The question then became where all the money to do this was coming from.

CBS: Is that tax money?

Bernanke: It's not tax money. The banks have accounts with the Fed. So, to lend to a bank, we simply use the computer to mark up the size of the account they have with the Fed.

So, it's much more akin, although not exactly, but it's much more akin to printing money than it is to borrowing.

CBS: You've been printing money?

Bernanke: Well, effectively, and we need to do that because our economy is very weak and inflation is very low.

While it's obvious the Fed is trying to inflate its way out of deflation, the frankness on the part of Mr. Bernanke is unprecedented. But there's another reason why it's important to devalue the dollar at this time.

According to Dalio, there was a major devaluation and re-flation that marked the bottom of the Depression in March 1933. And in order to bring about this devaluation the Fed is going to have to print a lot of money.

From the U.S. point of view, we want a devaluation, he said. A devaluation gets your pricing in line. When there is a deflationary environment, you want your currency to go down. When you have a lot of foreign debt denominated in your currency, you want to create relief by having your currency go down. All major currency devaluations have triggered stock-market rallies throughout the world; one of the best ways to trigger a stock-market rally is to devalue your currency.