China warns Federal Reserve

[Panzerfaust]

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: 1:52PM BST 27 May 2009

Comments 102 | Comment on this article


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.

[Tock]

The Chinese ain't happy with what's going on in the USA . . .

----------------------------------

http://english.aljazeera.net/news/as...330678558.html

China 'caught in US money trap' China is estimated to have currency reserves of two trillion dollars, but the bulk of it is tied up in US markets.
Caught in a "dollar trap", it has little choice but to buy more and more US government bonds to keep up the value of the dollar and hope a US recovery takes place - and quickly.
Al Jazeera's Owen Fay reports.

[MuscleScience]

I have been saying for a few years now, China is going to call in their bank note that we owe them in the form of the Chinese Red Army as the repo agent....

[spywizard]

it's ok.. obama will simply raise the price of corn from $2 bushel to $8 bushel..

debt paid in full..

and china, once North Korea drops an A bomb won't be worth much..

[spywizard]

it's ok.. obama will simply raise the price of corn from $2 bushel to $8 bushel..

debt paid in full..

and china, once North Korea drops an A bomb won't be worth much..

[MuscleScience]

it's ok.. obama will simply raise the price of corn from $2 bushel to $8 bushel..

debt paid in full..

and china, once North Korea drops an A bomb won't be worth much..

Yeah but they aint dropping it on China.

[MuscleScience]

it's ok.. obama will simply raise the price of corn from $2 bushel to $8 bushel..

debt paid in full..

and china, once North Korea drops an A bomb won't be worth much..

Yeah but they aint dropping it on china.

[Panzerfaust]