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China to US: STOP YOUR FARKIN MONEY PRINTING

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and so it continues.

 

 

http://www.telegraph.co.uk/finance/f...ing-money.html

 

China warns Federal Reserve over 'printing money'

China has warned a top member of the US Federal Reserve that it is increasingly disturbed by the Fed's direct purchase of US Treasury bonds.

 

By Ambrose Evans-Pritchard

Last Updated: 1:33PM BST 27 May 2009

 

Richard Fisher, president of the Dallas Federal Reserve Bank, said: "Senior officials of the Chinese government grilled me about whether or not we are going to monetise the actions of our legislature."

 

"I must have been asked about that a hundred times in China. I was asked at every single meeting about our purchases of Treasuries. That seemed to be the principal preoccupation of those that were invested with their surpluses mostly in the United States," he told the Wall Street Journal.

 

His recent trip to the Far East appears to have been a stark reminder that Asia's "Confucian" culture of right action does not look kindly on the insouciant policy of printing money by Anglo-Saxons.

 

Mr Fisher, the Fed's leading hawk, was a fierce opponent of the original decision to buy Treasury debt, fearing that it would lead to a blurring of the line between fiscal and monetary policy, and could all too easily degenerate into Argentine-style financing of uncontrolled spending.

 

However, he agreed that the Fed was forced to take emergency action after the financial system "literally fell apart".

 

Nor, he added was there much risk of inflation taking off yet. The Dallas Fed uses a "trim mean" method based on 180 prices that excludes extreme moves and is widely admired for accuracy.

 

"You've got some mild deflation here," he said.

 

The Oxford-educated Mr Fisher, an outspoken free-marketer and believer in the Schumpeterian process of "creative destruction", has been running a fervent campaign to alert Americans to the "very big hole" in unfunded pension and health-care liabilities built up by a careless political class over the years.

 

"We at the Dallas Fed believe the total is over $99 trillion," he said in February.

 

"This situation is of your own creation. When you berate your representatives or senators or presidents for the mess we are in, you are really berating yourself. You elect them," he said.

 

His warning comes amid growing fears that America could lose its AAA sovereign rating.

 

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$99 Trillion!!!????!!!!!!

Is that out to infinity or just 75 years? tongue.gif

 

Earlier this year we were pushing the Chinese to let the Yuan appreciate.

Doesn't this achieve the same end?

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Earlier this year we were pushing the Chinese to let the Yuan appreciate.

Doesn't this achieve the same end?

 

 

At this point I don't think the Chinese are concerned so much about balance of trade, as much as they are concerned about their "investment" in the United States (i.e., their holdings in U.S. treasuries).

 

If our sovereign credit rating gets downgraded from AAA (I think it will), the Chinese are going to take a huge hit. It's like us investing in Enron or Worldcom right at the peak.

 

I feel somewhat sorry for the Chinese. At the end of March they held $768 billion of U.S. Treasury and Agency securities:

 

http://www.treas.gov/tic/mfh.txt

 

They hold Treasuries as IOU's for real goods (plasma tv's, tacky lawnchairs, rubber dog poo) already sent to us.

 

An analogy in the b-s-t forum.

 

I buy a beachmaster plug for $50 from somebody in Lower Slobovia. But instead of cash the seller is okay with an IOU, with interest.

 

But my currency tanks. So the value of the guy's IOU drops to $30. The seller is pissed.

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View PostA visual reminder of what the Chinese are (and what we should be) worried about :

 

BASE_Max_630_378.png

 

 

 

The Chinese can pull the plug on the American rathole economy any time they desire. They have us by the short hairs.

 

One must also bear in mind, that if the Chinese should ever perceive, and conclude, that their 'investment' is imminently worthless, they have nothing to lose by dumping them on the open market. Granted, they will lose mightily, as well, but our Gov't & economy would implode, and we would devolve into hopeless, mindless anarachy, and probably dictatorship. If Obama is at the helm, Civil War is virtually guaranteed.

 

In net effect, the Chinese would defeat America economically, without ever firing a single shot. frown.gif

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Rock- interest rates of 6 or 8 pct keep inflation at tolerable level but starts the second dip which extends recession a couple more years

 

Hard place- Fed targets inflation at some 6 or 8 pct for a couple years to bolster growth and reduce debt, Chinese pull the plug, bonds/dollar crater.

 

How am I doing?

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While the Chinese are in a superior position, by holding our notes as opposed to us holding their debt, they are locked into a certain and ironic dance with us and can't just "pull the plug" unless they want to ditch the better part of a trillion dollars.

 

How would you like the prospect of someone that owed you money paying you back in money that was worth half of what it was when the debt was incurred? I'd be nervous as heck. Also, there isn't really another show in town for the Chinese to peddle their wares at... They need us to get back on our feet almost as badly as we do.

 

Jeff B.

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We will stop printing that Farkin money when cwm40.gif you stop selling us these toxic products! That is the main problem with the commies they do not care about their people or their peoples health so sending us all of this toxic products to sell does not mean anything to them.

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