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QE2 on the Unfavorable World Economic Development
- By Himfr Tian
- Published 02/2/2012
- Business Management
- Unrated
Himfr Tian
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With a new round of quantitative easing Federal Reserve monetary policy (QE2) to start, the outside world for the policy on the U.S. economy and the world economy controversial.
The policy for the further deepening of global uncertainty. This further development of the world economy adversely.
To bring inflation to the world
The main purpose of the policy is to stimulate growth. U.S. trade deficit as the main debtor countries and, through the quantitative easing policy has brought the dollar, played reduce the effect of U.S. debt payment obligations, but also export some of its short-term benefits. In addition, the loose monetary policies to help increase business investment and promote employment, restore consumer confidence in the U.S. economy short-term benefits. However, the policy on the U.S. inflation pressure, inflation pressure is also brought to the world, particularly in relation to the outside of the U.S. dollar as the world's major reserve currency, lost confidence, disrupt international trade and investment market value basis, to the globalization further deepen the uncertainty. This further development of the world economy adversely, but also that the world must quickly develop beyond the sovereign currency.
For China, this policy has brought several issues and challenges. The first is the inflationary pressure, especially with the yuan pegged to the dollar in the case of a weaker dollar makes dollar-denominated commodities all kinds of prices, then into the domestic commodity prices. The
second is to enter China's capital will increase a lot, because U.S. companies did not hand money, but there is no good investment projects, the quantitative easing part of the money supply will be brought into the hot money into China, forcing China to increase liquidity, This also makes the domestic inflationary pressure. The third is to increase upward pressure on domestic asset prices, including real estate bubble and the premium foam, which is associated with the front two. Fourth, monetary policy in the United States to other countries, trade protectionism, the rise of financial control doctrine provides a rationale, which is highly dependent on foreign trade of China's economy is not a good thing, forcing more to the domestic transfer of the Chinese economy.
U.S. policy does not lightly use the depreciation of the dollar, because they know the importance of maintaining a stable dollar. However, with the currency devaluation ways to reduce government debt, all the money holders from the private transfer of wealth in the hands is the usual practice since ancient times. In today's world, the dollar is in fact the world's major currencies, while the U.S. government policy and other governments or organizations not subject to the constraints, therefore, the United States the possibility of abuse of authority to issue currency has always been there, but do not need previous This move, but in the critical time will use this trick, just like now. With the dollar's depreciation, RMB appreciation pressure would certainly increase, especially if the appreciation of the RMB exchange rate is not the euro and other currencies States State will be very "angry."
The policy for the further deepening of global uncertainty. This further development of the world economy adversely.
To bring inflation to the world
The main purpose of the policy is to stimulate growth. U.S. trade deficit as the main debtor countries and, through the quantitative easing policy has brought the dollar, played reduce the effect of U.S. debt payment obligations, but also export some of its short-term benefits. In addition, the loose monetary policies to help increase business investment and promote employment, restore consumer confidence in the U.S. economy short-term benefits. However, the policy on the U.S. inflation pressure, inflation pressure is also brought to the world, particularly in relation to the outside of the U.S. dollar as the world's major reserve currency, lost confidence, disrupt international trade and investment market value basis, to the globalization further deepen the uncertainty. This further development of the world economy adversely, but also that the world must quickly develop beyond the sovereign currency.
For China, this policy has brought several issues and challenges. The first is the inflationary pressure, especially with the yuan pegged to the dollar in the case of a weaker dollar makes dollar-denominated commodities all kinds of prices, then into the domestic commodity prices. The
U.S. policy does not lightly use the depreciation of the dollar, because they know the importance of maintaining a stable dollar. However, with the currency devaluation ways to reduce government debt, all the money holders from the private transfer of wealth in the hands is the usual practice since ancient times. In today's world, the dollar is in fact the world's major currencies, while the U.S. government policy and other governments or organizations not subject to the constraints, therefore, the United States the possibility of abuse of authority to issue currency has always been there, but do not need previous This move, but in the critical time will use this trick, just like now. With the dollar's depreciation, RMB appreciation pressure would certainly increase, especially if the appreciation of the RMB exchange rate is not the euro and other currencies States State will be very "angry."
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