China warns Federal Reserve over 'printing money'

[Truth2Tell]

Source: Telegraph UK

By Ambrose Evans-Pritchard
1:52PM 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.

Read more: http://www.telegraph.co.uk/finance/financetopics/financialcrisis/5379285/China-warns-Federal-Reserve-over-printing-money.html

[madrchsod]

1. ya dance with the devil ya get burned...

china should put their currency on the open market and open their trade to the world. then the world can see what happens in communist china.

[Truth2Tell]

4. If, by dancing with the devil,

you mean investing tons of money in the bonds of a nation that blows it all on massive foreign wars, then yes, China got burned.

[saigon68]

16. a nation that blows it all on massive foreign wars

That would be us

[Truth2Tell]

18. correct.

China invested in our Tresury securities and we took the money and squandered it on an unsustainable War Empire. Live and learn suckers.

[DissedByBush]

9. Obama should think twice about signing overdrawn checks now n/t

[truthisfreedom]

2. Because we're idiots, China will now determine US fiscal policy.

What else will they control?

[Pavulon]

3. China is worried it may loose , they dont control shit

except for Tibetans they shoot when they get the urge.

[David__77]

5. It wouldn't just be China losing.

China certainly does have real leverage of US monetary policy, not in the formal-juridical sense, but in the informal-influence sense. You don't go around pissing off your big creditors upon whom you rely for the basic operation of government.

[Rosa Luxemburg]

11. remember there are always bananas

"The Banana Republic"

[ProudDad]

24. Nothing if we can get

everyone to quit shopping at Mal-Wart, etc.

[emilyg]

6. I don't blame them.

[bemildred]

7. Seems a bit late for this. nt

[Old and In the Way]

8. we all best hope that China doesn't dump

their USD holdings. Frankly, I doubt they will do anything rash...they'd lose as much as we would if they tried to liquidate their Treasury holdings in any short-term selling action. Long-term, they certainly don't want the Fed to do anything that erodes the dollar value further. I think they'll continue to push a new reserve formulation thatreduces the USD influence and more worldtrade that bypasses the USD entirely. Our free lunch period is pretty much over.

[roamer65]

10. The smartest move for China would be to dump all Treasury paper right now.

We are monetizing our debt, that is a fact. Quantitative easing is just a fancy buzzword for DEBT MONETIZATION.

We are going to try to inflate our way out of this crisis and the Chinese had better act accordingly.

[high density]

13. So who is going to buy all that crap from China after our economy completely implodes?

That's what happens when they "dump" us.

[Dreamer Tatum]

21. So they'd better cut their hand off before they lose a finger?

Real smart.

[Fovea]

12. The lack of Jen of monitarising debt would offend

The analects refer to a society where paper money had early influence.
Devaluation would be theft and deceit, in this world view, I believe.

Two other major Chinese philosophies, which came to be included to a degree in Confucianism, Mohism and Legalism
would also find monetarism to be a dishonest strategy, I believe.

There is no impartial care, but rather preferential hate in the dilution of value. Those who spend more of the total income on food and shelter
are affected to a greater degree.

That is my barbarian's take on it, at least.

[Vidar]

14. Cnina dismayed at US ambition to become Weimar Republic, part II.

[Joanne98]

15. Give us our fucking jobs back!

[Wednesdays]

17. K&R

:kick:

[defendandprotect]

19. Right . . . prices aren't going up -- your dollar is worth about half of what it was before Bush . !

[freedomnorth]

20. Is it monetising or monetizing? n/t.

[Truth2Tell]

22. Or maybe moneterizing?

:shrug:

[ProudDad]

23. Very funny

:rofl:

Now China's worried about the dilution of their "investments"...

:rofl:

It's the END OF THE WORLD AS WE KNOW IT (I hope)!

[Odin2005]

25. China manipulates it's currency to promote outsourcing from the US to China so they can STFU!

Hypocrites!

[Hannah Bell]

26. If China Stops "Manipulating" Its Currency It Will Stop Buying U.S. Treasuries

The Washington Post made yet another contribution to the nonsense about China literature. First we had the "alleged manipulation" of China's currency. This implies that there is some mystery surrounding China's currency policy. What is the mystery? China has a managed exchange rate that keeps its currency below market levels as official policy. What exactly are we looking for here. There is nothing in dispute.

Next we are told that Geithner can't really press China about this policy because they may stop buying our Treasury bonds, causing interest rates to rise. This should raise a huge cry of "huh?"

If China were to stop "manipulating" its currency, it would have to stop buying U.S. treasuries. These actions are one and the same thing. China keeps down the value of its currency by buying dollars. This is really simple -- supply and demand -- it keeps down the price of yuan by supplying more and increases the demand for dollars by buying up dollars.

If we want China to stop manipulating its currency, then we want it to stop buying U.S. government bonds, it's that simple. (The Fed can offset any reduction of Chinese purchases of Treasury bonds by buying more itself.)

http://www.prospect.org/csnc/blogs/beat_the_press_archive?month=05&year=2009&base_name=if_china_stops_manipulating_it


The Chinese & US gov'ts have a good scam going.

[Hannah Bell]

27. Psssst, Don't Tell Sebastian Mallaby, but the Dollar Already Plummeted in Value

There is a bizarre theory circulating in high Washington circles, expressed today by Sebastian Mallaby in the Post, that China is concerned that the huge dollar reserves it holds will lose value. The reason this is bizarre is that the dollar already plunged in value over the years 2002-2008 and China just kept buying more dollars.

The euro went from being worth just over 80 cents at the dollar peak in 2002 to over $1.60 at its trough early last year. Through this whole slide, China just kept buying up more dollars. Does anyone think that China's leaders did not notice the plunge in the value of the dollar? This is not exactly secret information.

Obviously, China's central bank was fully aware that the dollar was losing value but was willing to buy dollars anyhow in order to preserve its export market in the United States. That is the reason that it continues to buy dollars even though its leaders know that they will lose money on the deal. The economy can easily afford the loss, contrary to the bizarre calculations Mallaby uses in his column.

If it seems strange that elite Washington types can push economic views that are far removed from reality, remember, these people could not see an $8 trillion housing bubble.

--Dean Baker

http://www.prospect.org/csnc/blogs/beat_the_press_archive?month=05&year=2009&base_name=psssst_dont_tell_sebastian_mal