Zzzzzzzzzzzzzzzzzzzzzzzzzz Posted November 8, 2010 Share Posted November 8, 2010 http://www.bloomberg.com/news/2010-11-08/fed-easing-may-flood-world-economy-with-hot-money-chinese-official-says.html Quote Link to comment Share on other sites More sharing options...
Charlie The Tramp Returns Posted November 8, 2010 Share Posted November 8, 2010 It always amazes me how a current Communist Regime produces a so called great Capitalist Economic Guru. How they will receive a shock when their cheap labour finally rebels and they have to pay near on Western wages. In 25 years time the World Economy will be a completely different place, who then will be the cheap producers, the UK perchance. Quote Link to comment Share on other sites More sharing options...
scepticus Posted November 8, 2010 Share Posted November 8, 2010 http://www.bloomberg.com/news/2010-11-08/fed-easing-may-flood-world-economy-with-hot-money-chinese-official-says.html they are as bad as each other. Both are wiaiting for godot: "Waiting for Godot follows two days in the lives of a pair of men who divert themselves while they wait expectantly, and unsuccessfully for someone named Godot to arrive. They claim him as an acquaintance but in fact hardly know him, admitting that they would not recognise him were they to see him. To occupy themselves, they eat, sleep, converse, argue, sing, play games, exercise, swap hats, and contemplate suicide — anything "to hold the terrible silence at bay".[4]" Quote Link to comment Share on other sites More sharing options...
aa3 Posted November 9, 2010 Share Posted November 9, 2010 You know a policy is working well when the other side starts squeeling. Germany and China are squeeling at the QE.. because it is an effective strategy to get these chronic surplus nations off their back. Quote Link to comment Share on other sites More sharing options...
Lone_Twin Posted November 9, 2010 Share Posted November 9, 2010 You know a policy is working well when the other side starts squeeling. Germany and China are squeeling at the QE.. because it is an effective strategy to get these chronic surplus nations off their back. Yes indeed, heaven forbid the prodcers should want PAYING for the shiny things. I mean really the indignity of it! Quote Link to comment Share on other sites More sharing options...
aa3 Posted November 9, 2010 Share Posted November 9, 2010 Yes indeed, heaven forbid the prodcers should want PAYING for the shiny things. I mean really the indignity of it! If they are worried about the future value of their very large accumulated US investments they are free to start buying US produced items to their hearts content. Quote Link to comment Share on other sites More sharing options...
The Ayatollah Buggeri Posted November 9, 2010 Share Posted November 9, 2010 Having just returned from two weeks in the US, I found it notable that a lot of the American media (including the Fox News right) were criticising QEII too. The number one grouse was the prediction of rising fuel prices resulting from the falling dollar, closely followed by other increased import costs and the risk that it would undermine the dollar's status as a reserve currency. The view was also expressed that the object of the exercise was to devalue the US's debt by the back door, which would have the result of making it more difficult and expensive for America to borrow in future. Quote Link to comment Share on other sites More sharing options...
leicestersq Posted November 9, 2010 Share Posted November 9, 2010 The reason that the Chinese dont like QE, is because it is a way of evening up the price of trade. The USA is effectively devaluing its currency, making US labour cheaper. That will make it more difficult for Americans to buy Chinese goods, and also it will make it cheaper to produce in the US compared to China. Ironic of course, because China has done all it can do to make the dollar-Yuan trade as unfair as possible by fixing the exchange rate. Now the US has responded by giving the Chinese a choice, either float the Yuan, and let trade balance, or keep the peg and be forced to by lots of dollars which will devalue, and in so doing, be obliged to print lots of Yuan that will cause inflation in China. If China or anyone else doesnt like US monetary policy, they can whinge all they like. The only way to insulate themselves from the effect is to float their currencies. I suspect that breaking the dollar-Yuan peg is the main reason for QE2, and if I were Bernanke, I would have done the same thing. Unlike Bernanke though, if the ploy were to work and China were to float its currency, I would then reverse my monetary policy, because all that inflation QE2 creates, instead of causing inflation in China, would cause inflation in the USA. I wouldnt want that to happen. Quote Link to comment Share on other sites More sharing options...
Zzzzzzzzzzzzzzzzzzzzzzzzzz Posted November 9, 2010 Author Share Posted November 9, 2010 leicestersq - I don't agree - inflation in China, etc., will feed global inflation, including US inflation. We live in a globalised economy. That's what will happen. Quote Link to comment Share on other sites More sharing options...
Alan B'Stard MP Posted November 9, 2010 Share Posted November 9, 2010 (edited) leicestersq - I don't agree - inflation in China, etc., will feed global inflation, including US inflation. We live in a globalised economy. That's what will happen. Despite him being a grade A nimrod - I agree with LQS. China is quite happy for america to print money - so long as they are the recipients and can create Yuan off the back of it. They're not so happy when its out there floating beyond its sphere of influence. Bernanke has hit the ball over the net and its Chinas turn to strike. Forget Gold - America has most of it. Food too. Edited November 9, 2010 by Alan B'Stard MP Quote Link to comment Share on other sites More sharing options...
leicestersq Posted November 9, 2010 Share Posted November 9, 2010 leicestersq - I don't agree - inflation in China, etc., will feed global inflation, including US inflation. We live in a globalised economy. That's what will happen. There will be some inflation in the US as a result of QE2, but not much. You have to remember that the Chinese policy which mandates that they must buy dollars to fix the exchange rate, means that the Chinese cannot really buy stuff back off of the Americans, because their output remains too expensive in the main. In turn, the Americans can just get stuff for free from the Chinese, because they accept US printed money, and dont, in turn, use that money to demand output from America. If the Chinese were to float, the Yuan would appreciate, and then the Chinese would either buy stuff from the US, or producers would shift production to the US as the cost equation changes. Such a change would cause major US inflation. You can tell from the Chinese response, that they are not happy about the US policy move. Which must mean that the US did the right thing. Quote Link to comment Share on other sites More sharing options...
Toto deVeer Posted November 9, 2010 Share Posted November 9, 2010 Bernanke has hit the ball over the net and its Chinas turn to strike. Strike with what? Do they even have a racket? Chinese QE? Quote Link to comment Share on other sites More sharing options...
Zzzzzzzzzzzzzzzzzzzzzzzzzz Posted November 9, 2010 Author Share Posted November 9, 2010 The Chinese may be upset because of the destabilising nature of the policy - first the mortgage meltdown, now this! Have you considered the impact on commodities, which will surely feed into worldwide inflation. Quote Link to comment Share on other sites More sharing options...
Toto deVeer Posted November 9, 2010 Share Posted November 9, 2010 The Chinese may be upset because of the destabilising nature of the policy - first the mortgage meltdown, now this! Have you considered the impact on commodities, which will surely feed into worldwide inflation. Crack up boom. Sustainable underlying demand is not there over the medium term. Quote Link to comment Share on other sites More sharing options...
Alan B'Stard MP Posted November 9, 2010 Share Posted November 9, 2010 Strike with what? Do they even have a racket? Chinese QE? Chinese QE leads to what? Quote Link to comment Share on other sites More sharing options...
leicestersq Posted November 9, 2010 Share Posted November 9, 2010 The Chinese may be upset because of the destabilising nature of the policy - first the mortgage meltdown, now this! Have you considered the impact on commodities, which will surely feed into worldwide inflation. We are going to get commodity price inflation anyway. I once read that China has to build the equaivalent of a city the size of Birmingham each MONTH, to house its people moving from the countryside. I did the maths, and that is about right. That is just a huge amount of demand that is being added to the world's total demand. Add in India and Brazil doing the same thing, and you can see why commodities are doing well. The Chinese policy of absorbing all those dollars, and stuffing them in their central bank, will mean that there will be inflation against the Renminbi, as they have to print new currency to be able to buy those dollars. That is where inflation will occur because of QE if they dont float. Quote Link to comment Share on other sites More sharing options...
Alan B'Stard MP Posted November 9, 2010 Share Posted November 9, 2010 (edited) The Chinese policy of absorbing all those dollars, and stuffing them in their central bank, will mean that there will be inflation against the Renminbi, as they have to print new currency to be able to buy those dollars. That is where inflation will occur because of QE if they dont float. Don't they need Chinese citizens to be in possession of these dollars to actually buy them with Rembini. US QE is sending dollar (derivatives) to all and sundry shotgun fashion. It can only mean upward revaluation for them - which they will assist with if selling their own treasuries to USG? Edited November 9, 2010 by Alan B'Stard MP Quote Link to comment Share on other sites More sharing options...
Toto deVeer Posted November 9, 2010 Share Posted November 9, 2010 Chinese QE leads to what? China's international currency is the dollar, as long as they are pegged. They can't QE, can they? Only the Fed can. Quote Link to comment Share on other sites More sharing options...
Alan B'Stard MP Posted November 9, 2010 Share Posted November 9, 2010 (edited) China's international currency is the dollar, as long as they are pegged. They can't QE, can they? Only the Fed can. I'm not sure what they can QE with? They've don't have a lot of government debt to buy because they never issued it. Maybe they can buy a few whorehouses in Shanghai with money from thin air Edit: I'm sure they can QE as much as they like if they see fit. They own all the ink factories. Edited November 9, 2010 by Alan B'Stard MP Quote Link to comment Share on other sites More sharing options...
Toto deVeer Posted November 9, 2010 Share Posted November 9, 2010 Maybe they can buy a few whorehouses in Shanghai with money from thin air : Quantitative sleasing?... Quote Link to comment Share on other sites More sharing options...
cells Posted November 9, 2010 Share Posted November 9, 2010 Many countries are pegged to the dollar. China is a big one but there are others. If the fed creates a lot of new dollars they will flow to areas that demand capital the most. That is to say everyone pegged to the dollar. China will get a lot of this QE money looking for a home. It will drive up inflation in china. The US can issue more money more quickly than any other nation without the negative impact of inflation because their pegs will have to soak it up and take the pain of inflation. Quote Link to comment Share on other sites More sharing options...
Alan B'Stard MP Posted November 9, 2010 Share Posted November 9, 2010 Many countries are pegged to the dollar. China is a big one but there are others. If the fed creates a lot of new dollars they will flow to areas that demand capital the most. That is to say everyone pegged to the dollar. China will get a lot of this QE money looking for a home. It will drive up inflation in china. The US can issue more money more quickly than any other nation without the negative impact of inflation because their pegs will have to soak it up and take the pain of inflation. Dollars don't flow. Didn't you get the memo? Quote Link to comment Share on other sites More sharing options...
Sour Mash Posted November 9, 2010 Share Posted November 9, 2010 If they are worried about the future value of their very large accumulated US investments they are free to start buying US produced items to their hearts content. How about they simply buy up future oil supply? It is priced in dollars, after all ... The West will be in for a shock as they are outbid for disappearing resources in the years to come using their own currencies. Unless of course they default or print. Quote Link to comment Share on other sites More sharing options...
scepticus Posted November 9, 2010 Share Posted November 9, 2010 I'm not sure what they can QE with? They've don't have a lot of government debt to buy because they never issued it. Maybe they can buy a few whorehouses in Shanghai with money from thin air Edit: I'm sure they can QE as much as they like if they see fit. They own all the ink factories. they can QE just by crediting theank accounts of anyone they wish to buy goods and services off. Quote Link to comment Share on other sites More sharing options...
Alan B'Stard MP Posted November 9, 2010 Share Posted November 9, 2010 they can QE just by crediting theank accounts of anyone they wish to buy goods and services off. Can anyone do that? Quote Link to comment Share on other sites More sharing options...
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