U.S. Tries To Save Market Irresponsibly, Causes Global Concerns
Published in China News
(China) on 26 March 2009
by Yan Hai (link to original)
(China) on 26 March 2009
by Yan Hai (link to original)
Translated from
by Warren Wang.
Edited by Christie Chu.
The Hong Kong Daily published on March 26 quoted an expert’s opinion that America’s recent "irresponsible" way of saving the market is the cause of the global intention to abandon U.S. dollars.
The report quoted Yanlin Tan, senior analyst for Bank of China, who remarked that over the past seven months the U.S. Federal Reserve has already injected about 800 billion dollars into the financial system, and according to the new plan, the Federal Reserve may inject a trillion dollars or more into the financial system over the next few months. Such a massive injection of liquidity into the market is equal to turning on the printing presses.
Right now it is helpful for the Federal Reserve to directly buy the U.S. debt in order to ease the U.S. credit crunch and stimulate economic recovery. In the long run, though, it will lead to the devaluation of U.S. dollars. Yaling Tan pointed out that the result of an over-supply of U.S. dollars will be rising gold and oil prices. However, as investors increasingly value gold, America, the holder of the largest gold reserves, will be able to take more initiative globally. At the same time, other countries holding U.S. dollar-denominated assets will become more and more passive. Because the U.S. dollar is a reserve currency, America can take the risk of printing more dollars, and because of this America will finally plunder the "global fortune."
The report quoted Yanlin Tan, senior analyst for Bank of China, who remarked that over the past seven months the U.S. Federal Reserve has already injected about 800 billion dollars into the financial system, and according to the new plan, the Federal Reserve may inject a trillion dollars or more into the financial system over the next few months. Such a massive injection of liquidity into the market is equal to turning on the printing presses.
Right now it is helpful for the Federal Reserve to directly buy the U.S. debt in order to ease the U.S. credit crunch and stimulate economic recovery. In the long run, though, it will lead to the devaluation of U.S. dollars. Yaling Tan pointed out that the result of an over-supply of U.S. dollars will be rising gold and oil prices. However, as investors increasingly value gold, America, the holder of the largest gold reserves, will be able to take more initiative globally. At the same time, other countries holding U.S. dollar-denominated assets will become more and more passive. Because the U.S. dollar is a reserve currency, America can take the risk of printing more dollars, and because of this America will finally plunder the "global fortune."
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