Comments on: China warns that the west’s quantitative easing is inflationary http://www.creditwritedowns.com/2009/05/china-warns-that-the-wests-quantitative-easing-is-inflationary.html Finance, Economics and Markets Fri, 10 Feb 2012 00:37:00 +0000 hourly 1 By: aitrader http://www.creditwritedowns.com/2009/05/china-warns-that-the-wests-quantitative-easing-is-inflationary.html#comment-56372 aitrader Thu, 07 May 2009 08:06:00 +0000 http://www.creditwritedowns.com/2009/05/china-warns-that-the-wests-quantitative-easing-is-inflationary.html#comment-56372 China is also lowering it's purchase volume of treasuries and purchasing more short-term in lieue of long bonds (30 year). This has been the basis of my argument that the current "recovery" and "green shoots" are simply irrational exuberence, and my question as to just how the US is going to finance its huge deficits? It appears the US is printing money on one side to buy its own bonds on the other (Fed and Treasury). This is not just inflationary, it will likely destroy global confidence in the US dollar itself and jeopardizes its role as the reserve currency. The dollar's role in world trade is critical and a collapse in confidence in it portends a global trade catastrophe. I think I have harped on the situation of multiple competing fiat "reserve" currencies with no backing of any kind trying to fund global trade. I see things degenerating into barter trade where one set of goods sitting on a ship somewhere is exchanged for another somewhere else because no stable currency of exchange exists. This will be a humdinger collapse in the volume of global trade and will give shipping companies with global reach a near monopoly over certain trade goods sold in local currencies. As von Mises said, there is no way to gauge marginal utility without a neutral currency as measure desired by both parties. It will be interesting to see what/if this situation brings if it does in fact occur. China is also lowering it’s purchase volume of treasuries and purchasing more short-term in lieue of long bonds (30 year).

This has been the basis of my argument that the current “recovery” and “green shoots” are simply irrational exuberence, and my question as to just how the US is going to finance its huge deficits?

It appears the US is printing money on one side to buy its own bonds on the other (Fed and Treasury). This is not just inflationary, it will likely destroy global confidence in the US dollar itself and jeopardizes its role as the reserve currency. The dollar’s role in world trade is critical and a collapse in confidence in it portends a global trade catastrophe.

I think I have harped on the situation of multiple competing fiat “reserve” currencies with no backing of any kind trying to fund global trade. I see things degenerating into barter trade where one set of goods sitting on a ship somewhere is exchanged for another somewhere else because no stable currency of exchange exists. This will be a humdinger collapse in the volume of global trade and will give shipping companies with global reach a near monopoly over certain trade goods sold in local currencies.

As von Mises said, there is no way to gauge marginal utility without a neutral currency as measure desired by both parties. It will be interesting to see what/if this situation brings if it does in fact occur.

]]> By: Gary http://www.creditwritedowns.com/2009/05/china-warns-that-the-wests-quantitative-easing-is-inflationary.html#comment-56368 Gary Wed, 06 May 2009 15:03:00 +0000 http://www.creditwritedowns.com/2009/05/china-warns-that-the-wests-quantitative-easing-is-inflationary.html#comment-56368 OK, thanks! OK, thanks!

]]> By: Edward Harrison http://www.creditwritedowns.com/2009/05/china-warns-that-the-wests-quantitative-easing-is-inflationary.html#comment-56367 Edward Harrison Wed, 06 May 2009 15:01:00 +0000 http://www.creditwritedowns.com/2009/05/china-warns-that-the-wests-quantitative-easing-is-inflationary.html#comment-56367 Gary, basically it means bond markets are getting killed as the reflation trade takes hold. http://www.creditwritedowns.com/2009/04/treasuries-are-getting-crushed.html Gary, basically it means bond markets are getting killed as the reflation trade takes hold.

http://www.creditwritedowns.com/2009/04/treasuries-are-getting-crushed.html

]]> By: Gary http://www.creditwritedowns.com/2009/05/china-warns-that-the-wests-quantitative-easing-is-inflationary.html#comment-56366 Gary Wed, 06 May 2009 14:54:00 +0000 http://www.creditwritedowns.com/2009/05/china-warns-that-the-wests-quantitative-easing-is-inflationary.html#comment-56366 "Global central banks risk inflation, currency devaluation and a “big consolidation” in bond markets" Can anyone explain what "big consolidation" means? Thanks “Global central banks risk inflation, currency devaluation and a “big consolidation” in bond markets”

Can anyone explain what “big consolidation” means? Thanks

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