STOP SCREWING UP OUR INVESTMENTS!

STOP SCREWING UP OUR INVESTMENTS!

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.

As we all should be.

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.

In other words, "We've bought a lot of your bonds, and we expect them to be worth more than toilet paper."

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.

Degenerate into uncontrolled spending? Since when have we had controlled spending? But I guess it was this chart that finally grabbed their attention:


It scares the hell out of me.

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.

Time to buy, buy, BUY! Before the inevitable hyper-inflation.

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.

Ninety-nine trillion dollars. That's a number I don't think anyone can really get their heads around. Certainly not 535 Congresscritters.

"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.

Which, again, explains why our education system and our media are the messes that they are. Who wants an intelligent, informed and engaged electorate? What is there in that for anybody? It's much easier to promise the ignorant, apathetic masses bread and circuses for their votes.

(Via Glenn.)