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Posts Tagged ‘printing money’

We are entering very dangerous waters.  The backlash will be severe, we are already seeing the effects…

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QE2 risks currency wars and the end of dollar hegemony

As the US Federal Reserve meets today to decide whether its next blast of quantitative easing should be $1 trillion or a more cautious $500bn, it does so knowing that China and the emerging world view the policy as an attempt to drive down the dollar.

By Ambrose Evans-Pritchard, International Business Editor
Published: 9:56PM GMT 01 Nov 2010

QE2 risks currency wars and the end of dollar hegemony 

QE2 risks currency wars and the end of dollar hegemony Photo: AFP

The Fed’s “QE2” risks accelerating the demise of the dollar-based currency system, perhaps leading to an unstable tripod with the euro and yuan, or a hybrid gold standard, or a multi-metal “bancor” along lines proposed by John Maynard Keynes in the 1940s.

China’s commerce ministry fired an irate broadside against Washington on Monday. “The continued and drastic US dollar depreciation recently has led countries including Japan, South Korea, and Thailand to intervene in the currency market, intensifying a ‘currency war’. In the mid-term, the US dollar will continue to weaken and gaming between major currencies will escalate,” it said.

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Here we go, its official.  Watch for price increases over the next 3-6 months…

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Fed to Spend $600 Billion More To Help Boost US Economy

The Federal Reserve launched a controversial new policy on Wednesday, committing to buy $600 billion more in government bonds by the middle of next year in an attempt to breathe new life into a struggling U.S. economy.

Sheet of US one hundred dollar bills
Don Farrall | Digital Vision | Getty Images

The decision, which takes the Fed into largely uncharted waters, is aimed at further lowering borrowing costs for consumers and businesses still suffering in the aftermath of the worst recession since the Great Depression.

The U.S. central bank said it would buy about $75 billion in longer-term Treasury bonds per month. It said it would regularly review the pace and size of the program and adjust it as needed depending on the path of the recovery.

In its post-meeting statement, the Fed described the economy as “slow”, and said employers remained reluctant to add to payrolls. It said measures of inflation were “somewhat low.”

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We are at a dangerous point this week.  Under the cover of all the election hype, the federal reserve is making probably the biggest decision in this century…remain watchful, stock up on food & water, make sure you fill up your cars with gas…pray, trust in God.  It is going to be quite a ride…

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Watch for what the Fed does today, headlines from Drudge on fed’s decision…

Treasury estimates $362B in borrowing for quarter...

Bernanke Faces More Congressional Scrutiny After Republican Election Gains...

PUMP: Fed Likely to Announce $500 Billion of Purchases...

'Biggest decision in decades'...

Fed easing may means 20% drop of dollar value...

'The end of dollar hegemony'...

Sen. Gregg: 'We're Greece' in a Few Years...

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Click on the article title for a link to full original referenced article.

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Concerns from China on our openness to devaluing our dollar through the printing press (i.e. quantitative easing.)

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Dollar printing feeding China inflation: minister

Rampant issuance of dollars by the United States is saddling China with “imported inflation”, Chinese commerce minister Chen Deming was quoted as saying by state media on Wednesday.

“Given the current situation, companies have thought ahead and prepared for exchange rate fluctuations as well as an increase in labour costs,” Chen said, according to the state-run China Business News.

“But because the issuance of dollars is out of control, and international commodities prices are continuing to rise, China is confronted with imported inflation, which has created major uncertainties for businesses,” he said.

The comments came ahead of a meeting of the US Federal Reserve next week at which the central bank is expected to announce additional stimulus measures.

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What are we doing?  Even with over a trillion and a half of printed dollars from the Fed and we are still running a deficit of $1.29 trillion?  We are digging ourselves a very deep hole…

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Government to report on $1 trillion-plus deficit

WASHINGTON – The Obama administration is set to report Friday that the federal budget deficit exceeded $1 trillion for the second straight year, providing critics of government spending with fresh ammunition ahead of the midterm congressional elections.

The Congressional Budget Office is projecting that the deficit for the 2010 budget year that ended Sept. 30 will total $1.29 trillion. That’s down by $125 billion from the $1.4 trillion in 2009 – the highest deficit on record.

Soaring deficits have become a problem for Democrats in an election year focused on the weak economy.

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The headline says it all, how can that not be seen as an act of desperation as we begin the fall…

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Fed Undaunted by Uncertain Prospects for Money Printing

The U.S. Federal Reserve runs the risk of diminishing returns from its next round of money printing to amplify the subdued economic recovery, but that won’t stop it from trying.

Sheet of US one hundred dollar bills
Don Farrall | Digital Vision | Getty Images

Minutes due Tuesday from the Fed’s most recent policy-setting meeting may reflect some divisions among officials over whether to launch another round of asset purchases, known as quantitative easing.

Investors, however, assume the Fed will pull the trigger, likely at its next policy-setting meeting in November.

A Reuters poll of 16 primary dealers—investment firms that deal directly with the Fed—showed all expected the central bank to return to buying bonds.

All but one predicted the announcement would come at the Nov. 2-3 meeting.

The Fed cannot sit idly by with unemployment stuck near 10 percent and inflation below the central bank’s perceived target, economists say. Statements from some of the Fed’s top officials in recent days have made it increasingly clear that action is likely, even though others remain vocally opposed.

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Oh boy, here we go, doing exactly what China warned against, see my previous posts listed below:

Geithner Steps up China Yuan Policy Criticism

Chinese think tank warns US it will emerge as loser in trade war

This was one of the triggers I discussed in that post.  If China retaliated by selling off (dumping) our treasury debt, then we would see the Federal Reserve need to jump in a purchase our debt by printing money to do it.  Another trillion dollars of inflationary printing, with China alone, not counting others that pile on to the sell off.  It would crash our currency over a short period of time.

This could set us up for the coming single world currency and vulnerable/open to the single world government scenarios as we search for stability.  As I have stated above, we don’t know what will trigger it, but it will be interesting to see what is the final straw…

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US Congress committee approves China sanctions bill

A US Congress committee has approved a bill that would place retaliatory trade sanctions on China.

It means the House of Representatives – the lower chamber of Congress – will vote on the bill next week.

The bill would allow the US to impose import duties on countries who have fundamentally undervalued currencies.

To become law, the bill would also need support in the Senate, which is less certain ahead of mid-term Congressional elections due in November.

The US accuses China of holding down the value of its currency, the yuan, in order to give its exports an unfair price advantage.

(more…)

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