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QE3 comes finally, US loots the world again   [Copy link] 中文

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Post time 2012-9-14 09:58:26 |Display all floors
This post was edited by desperado123 at 2012-9-14 09:58

the Fed said it will buy $40 billion per month in mortgage bonds in addition to $45 billion in Treasury bonds through the end of the year, a process known as “quantitative easing.” After that, the Fed will reassess its actions, but it is likely to continue buying tens of billions of dollars of mortgage bonds unless the economy suddenly shows signs of a major rebound.--------Wall Street Journal.

You can image the world will bear the brunt of the flowing greenbacks as the dollar is still on the dominant place of the national reserves in most of countries like China, Japan, and other developing countries. Of course, China will stand the loss due to the depreciation following the quantitative easing. In other words, US is looting the world with its advantage over currency.

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Post time 2012-9-14 14:52:12 |Display all floors
I used to be more upset about these things but I don't put much blame on the USA. They have clearly showed they don't care much for nations that peg their currency to the dollar.

For most of us it is of greater importance what our local central banks are doing. They are the enablers of American policy, some more than others.

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Post time 2012-9-14 14:56:59 |Display all floors
pantarhei Post time: 2012-9-14 14:52
I used to be more upset about these things but I don't put much blame on the USA. They have clearly  ...

Simple fact is if the US weren't hooked on cheap imports the far east wouldn't have accumulated so much wealth.
Your own mind is a sacred enclosure into which nothing harmful can enter except by your permission. Arnold Bennett

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Post time 2012-9-14 15:05:14 |Display all floors
The coming collapse of USD is imminent !
Please don't shoot, I'm just a babe.

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Post time 2012-9-14 15:10:15 |Display all floors
I remember John Connaly's famous sentence: "The Dollar is our currency, but your problem" - and that's pretty much catching the situation.
The FED only has the obligation to provide the markets with sufficient liquidity - and markets are currently not having enough of it, inflation and economic growth are down, so the logical consequence is to print more money. Now as Asian economies buy a considerable share of the money the FED prints, the FED prints accordingly more - I don't see any wrong with that. That's how monetary politics work... it wasn't the FED that told China to pledge its currency towards the Dollar.

So what could China do to not suffer losses on its Dollar assets?
Simply sell the Dollars. If China sells a part of it's US-Dollar reserves, the FED would not have to print money (as there is again sufficient liquidity, this time provided by China) and China would be less exposed to risks from the US. As there would be so much Dollar liquidity, there might even be too much, inflation might go up and force the FED to increase interest rates instead, so China'd earn higher returns on it's remaining reserves.
However, there would be other problems with this policy that would have to be kept in mind, of course.

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Post time 2012-9-14 15:18:12 |Display all floors
St_George Post time: 2012-9-14 14:56
Simple fact is if the US weren't hooked on cheap imports the far east wouldn't have accumulated so ...

I think they have actually crippled they wealth generation rate by their currency pegs. But anyway, this game is nearing an end. it is clear that US and EU can't carry emerging markets at these consumption rates anymore. And China wouldn't be able produce things this cheap much longer anyway.

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Post time 2012-9-14 15:27:22 |Display all floors
This post was edited by correction at 2012-9-14 15:34

3.3 trillion USD in forex reserves.
How to avoid losses ?
Many ways to diversify.
Gold, crude oil, grains, useful commodites, other stable currencies around the world, etc.
Give out cheap loans in USD to countries in EU and other countries,
but repayments in Rmb or other more stable currencies or even in gold or other useful commodities.
Invest more in friendly countries - Laos, Cambodia, Bangladesh, Sri Lanka, Central Asia, S America, Africa, etc.
Please don't shoot, I'm just a babe.

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