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Fed Backfire Want to Put Pressure on the RMB by the Global Crusade By Lanbo Jiang

  in Business | Published 2012-01-17 00:32:20 | 142 Reads | Unrated

Summary

"Exchange rate war" is still the focus of the question, but the object has moved November 11, the Group of Twenty (G20) summit held in Seoul, South Korea, the United States had hoped to use of this platform to put pressure on the renminbi, but did not think it makes the dollar as the national monet ary policy, the focus of complaints

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"Exchange rate war" is still the focus of the question, but the object has moved.

November 11, the Group of Twenty (G20) summit held in Seoul, South Korea, the United States had hoped to use of this platform to put pressure on the renminbi, but did not think it makes the dollar as the national monetary policy, the focus of complaints.

Fed launched the second round of quantitative easing (QE2) monetary policy in the next 8 months purchase worth 600 billion U.S. dollars U.S. Treasury bonds, which makes the already weak dollar fall further against major currencies wo
rldwide.

The United States since become the target, Germany, Brazil, Russia, China and other countries on the QE2 made a scathing criticism. Germany played a leading role against the QE2, China and other emerging markets is very pleased to support, because the QE2 weighed on the dollar, resulting in massive hot money flows to emerging economies could lead to economic instability.

For a long time, the U.S. Treasury dollar policy in talking about, often only one standard answer: "We support a strong dollar policy", in addition to the basic will not do further elaboration.

But Greenspan's remarks, had to let Geithner also uncharacteristically, he underwent emergent CNBC interview that day, the dollar's recent weakness to explain the reasons.

Geithner said the dollar's recent decline is due to seek "safe haven" of capital caused by reflux. He said investors no longer seek the recent U.S. dollar assets as shelter, although the U.S. still faces challenges, but this is "a sign of confidence, but also that we face a global risk control." This shift was, "We see a dominant trend."

Geithner said, "I respect Alan Greenspan, was honored to work with him was long, but he said, the Fed's policy or whether it is our policy, are not accurate."

Global crusade against the Federal Reserve

Since the Fed started QE2 on Friday, the international community's condemnation of the policy of a sound wave after wave. People worried that the Fed funds to the financial markets will not enter into the real economy, but the formation of asset bubbles into overseas markets.

German Chancellor Angela Merkel said in an interview, QE2 "by the artificially low exchange rate to stimulate exports," the policy "short-sighted and will ultimately harm the interests of all."

German Finance Minister Schäuble, accusing the Fed policy "disastrous", German Economic Minister Bruderle is that the United States "indirect manipulation of the dollar."

Brazilian Finance Minister Mantega criticized the Fed move is difficult to increase employment, but it will contribute to global imbalances, he said the Fed will be G20 on the complaint. South African Finance Minister Gordan accused QE2 "damaged the G20 leaders during the crisis to defend the spirit of multilateral cooperation, but also against the G20 meeting of finance ministers and central bank governors of the spirit."

National critics so large, that Obama personally had to defend for the QE2.

"I would say the Fed's task, my task is to develop our economy," Obama said Monday during his visit to India said, "not just the United States, the global economy, the most likely to occur poor results is that we will eventually fall into stagnation or limited growth situation. "

Obama said, "We will never pursue a weak dollar to gain a competitive advantage, or to economic growth."

U.S. backfire?

A month ago, Brazilian Finance Minister Mantega openly declared war has erupted global exchange rate. After a few days the World Bank and International Monetary Fund (IMF) annual meeting, the exchange rate war to become the focus of the question, the RMB is under great pressure, and showed a tendency to accelerate the appreciation.

But the Fed started QE2, making the "currency war" significant reversal of the war situation.

Dick Bove, banking analyst at Wall Street this week reported that the Fed might have another purpose start QE2, my view is that the United States in fighting the financial war with China. There are two main battlefield - the budget deficit and trade deficit, the U.S. is defeated. So the United States may take some dramatic action hope to reverse the relative situation of the war.

Now it seems that the U.S. "to reverse the situation of the war" seems more intent backfire. Crusade on the QE2, of course, do not lack the voice of China. The latest criticism from the Chinese Grand Duchy of private credit rating agency Global Credit Rating Company.

Emirates International published in the November 10 report, the United States lowered the foreign currency sovereign credit. Emirates International believes that the U.S. launch of QE2, that the actual solvency deterioration of the government debt will decline, so will the United States the foreign currency sovereign credit rating lowered to AA from the previous A + grade, the credit outlook to negative tone.

In the Emirates International, the Chinese Vice Premier Wang Qishan, the central bank governor Zhou Xiaochuan, Vice Foreign Minister Cui, central bank vice governor Ma Delun, Deputy Minister of Finance Zhu Guangyao on several occasions criticized the policy of the Fed's QE2.

For example, Deputy Foreign Minister Cui said: "As the world's major reserve currency issuing countries, the United States on this issue to demonstrate a responsible attitude." He said the United States to implement quantitative easing monetary policy caused concern in many countries in the world, the United States this should make an appropriate interpretation, so as not to affect the international community's confidence on the world economic recovery.

Tremendous pressure, causing the United States has almost given up on its G20 proposal for a core of China: the current account surpluses from 4% of GDP or less.

21pbn

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