Skip to comments.China warns Federal Reserve over 'printing money'
Posted on 05/27/2009 8:28:25 AM PDT by hripka
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.
However, he agreed that the Fed was forced to take emergency action after the financial system "literally fell apart".
(Excerpt) Read more at telegraph.co.uk ...
The Chicoms may be the US citizens best friend right now.
Ironic, isn’t it?
That's because YOU ARE MONETIZING THE DEBT you idiot. Hawk or not, you've got to realize the Chinese can see through "qualitative easement" to the real name "monetizing the debt."
I mean, I know the Fed can count on most people not noticing, but some of us HAVE noticed.
Don't fall for this "Red Chinese" bullsh!t either, they are superb merchantilists and they KNOW a bad investment on sight.
Bond market dislocation is just around the corner. When that happens, all hell is going to break loose.
[Fisher] 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.That indeed would be a very big hole.
"We at the Dallas Fed believe the total is over $99 trillion," he said in February.
$99 Trillion....I can’t even comprehend that number. At some point, somebody will have to say stop and that will be it. It will be terrible for those of us going through it, but it will have to be done.
Watch the TNX (essentially the ten-year Treasury x10).
And our new masters down the road. "The borrower is the lender's slave."
My question is, what does one do that has a large chunk of their 401K in a "stable" fund heavily invested in bonds to protect it from wild stock market swings? Ideas anyone?
The US is the North Korea of Public Spending. Warn us all you want! We WILL print money!
Could you flesh out what that means to us laymen?
So the Communists are scolding us on our growing socialist ways? Wonder what they know that we don’t? Let’s go to the tagline for that answer!
Not in this lifetime...China is a communist country and an enemy of this country. It is disgraceful that we have enriched China with our trade dollars so they are in a position to tell our government what to do. A powerful dangerous China is the end result of stupid shortsighted trade policies...that never made any sense.
1. You could go cash, in hopes of buying stocks very cheaply in the future.
2. You could go foreign bonds/bond funds if the value of the dollar scares you, as it does me
3. You could go with gold or silver, not the best investment but a good store of value.
4. Just about anything other than US Treasuries, as they are going to get killed.
Fearing it would lead to? The camel's nose was in the tent years ago - the rest already followed, and now he is rummaging through the fridge and sleeping in the bed. The treasury and fed are past the reach-around phase and are hurrying off to Massachusetts for nuptials before birthing and bailing out from the toilet their giant love-turd.
And yes, I understand their motivation - I don't agree with it though. In the view of the economic overlords, the government is essentially purchasing short term political stability at the expense of long term economic solvency. That is the gist of "saving capitalism from itself" - they think they can head off social unrest long enough for the economy to recover, and that the slower future economic growth post-recovery is a better fate than the attendant sociopolitical upheaval in the event that the $7 trillion shield between shit and fan is brought down (at which point, as they point out, we will pay out anyway).
Qualitative easement or quantitative easement?
Either way, it’s BS. The real name is “monetizing the debt.”
A better question is, what will you do when the .GOV seizes all private 401k assetts outright and sticks you with worthless IOUs in a new Social Security-type ponzi scheme?
Bonds essentially have no meaning or illusion of security anymore, as the federal government has now demonstrated the will and ability to completely ignore the rule of law and simply ignore the legitimate claims of senior bondholders.
I shut off inputs to my 401k months ago to prevent further loss, and I'm expecting to lose the entire balance, which I'm unable to yank so long as I'm still employed.
$99 trillion???? Even God couldn’t bail us out at this point.
Ammo: It’s the new currency.
When a government can decide who gets paid, who it can default on and the legal creditors are told to go uck-fay themselves the investors will return the salute.
Bond market dislocation would mean a calamitous rise in the cost of credit, literally real wrath of God stuff. The economy grinds to a cliffdiving halt because borrowing/lending comes to an effective standstill.
It just fell apart, for no apparent reason.
Barney did it.
Pravda prints weekly articles screaming about the failures of socialism. Putin says America is going terribly wrong to nationalize businesses. RED CHINA is telling us that it’s irresponsible to monetize our debt through inflation. They might not continue investing in our bonds, if we cannot be responsible with our fiscal policy. The French president openly, and correctly, calls the US president a child. And im fairly sure hes a Muslim, and a non-citizen.
I dont know whether to laugh or cry. I just want it to stop.
I don’t think any of those options are available to me seeing the Company 401K plan provides us limited investment vehicles to invest in, with the “stable” bond fund supposedly being the “safest”. It’s either that, or stock funds. I feel trapped and about to watch 30 years of savings go down the tube a couple of years before I could retire early.
Even a whiff of that nonsense would crash the equity markets here and likely all over the world given the funds that invest in US companies. There would be nothing of any value for them to seize.
I've thought about that, but hesitate to stop contributions that are matched by my company. I hate to leave that free money on the table. You might see if your company plan has a loan option where you can borrow against your 401K balance and the repayments are deducted from your paycheck over a period of time. Our limit is $50K paid back over 54 months, or 10 years if related to purchasing a house. I'm seriously thinking of borrowing the max to at least get my hands on that part of my money, before the Federal government has a chance to confiscate it.
Indeed, China hold their feet to the fire.
Incredible turn of events...
“I shut off inputs to my 401k months ago to prevent further loss, and I’m expecting to lose the entire balance, which I’m unable to yank so long as I’m still employed. “
I am in the same boat and did the same thing as you in Spring of 08 and even put it all in a money market position, so no stocks or mutual funds for my 401k right now. I still put in a very small amount monthly into my IRA, but the real retirement asset I have is my 401k. I hate letting it sit idle but given the economy the way it is....
please I hope it stops. seriously are we in the end times?
IMO< this should be extremely troubling to us. China is under the impression that it can dictate to the U.S. Whether true or not, it’s certainly a wake up call.
How did we get here? Is this where we want to be? Is there need for change to avoid this?
Frankly, it’s just more confirmation of the problems I have been predicting for about fifteen years now. We really screwed up by super-charging China.
I think it goes like this, and somebody tell if I'm on the wrong track, remember how you felt about 20's ( yuppy food stamps, etc.), well soon you'll feel that way about 50's, then 100's, etc..
“please I hope it stops. seriously are we in the end times?”
The endtimes for the US as we know it. A new government has taken power which is totally abdicating US foreign policy goals and more interested in looting the national economy. The US has been rotting from within for years, and we have crossed a threshold.
My mortgage company is a joke and corrupt.
Are we as a society/people so complacent that there could be a headline even worse than nuke fears of commie rogue countries and people would only be pissed if american idol call in to vote was proved to be bogus or dancing with the stars went off air?
You should have a moneymarket type vehicle available....
Thanks Osage. I’ll double check to be sure.
Yes, only the Chi-Coms and other countries are supposed to print counterfeit US currency...
What do you mean by that?? Just curious
..more like a frememy.
Actually you can pull it out and pay taxes and penalties which average about 50%. Better 1/2 than none. For the record I am not advocating this.
Yep. They may be putting the brakes on us because our erected officiars can’t.
That will mean higher interest rates and much greater debt. We can cut the blow in two ways: Print, print, print and inflate ala Weimar or raise taxes through the roof to service the debt and regain our rating.
Where does that leave investors? I suppose stocks are somewhat sheltered from inflation as you own a portion of a company (and not the dollar) but under both scenarios (inflation and taxation) the economy (and companies) take a hit. Gold and commodities work too but you don't want to put all you eggs in one basket.
So where then?
Foreign stocks and bonds?
Any particular sectors fair better than others? I would say health care, but, given the push for Obamacare and their behavior with the auto companies and banks, it seems a lot riskier than would otherwise be the case.
Is it any wonder so much investment $$$ is still on the sidelines. Seriously, what reasonable options are there?
Yep. That's my predicament.
I think we are in the calm before the storm. The big waves are headed our way.
Not good. Predictable, but not good.
Don't you wish you could print your own money? Why would China think Obama/Bernake would do this? Maybe they notice all Obama's spending 'pays for itself' except taxes on that 5%.
Thanks rabscuttle385 for ping.
My short answer would be ‘yes.’ We are entering what is looking more and more like some near-future science fiction novels in terms of how our society, government, and technology works and interacts.