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summers013013.html
China Fires A Warning
Shot At The Fed
Graham Summers
1 February 2013
A senior Chinese official said on Friday that the United
States should cut back on printing money to stimulate its economy if the
world is to have confidence in the dollar.
Asked whether he was worried about the dollar, the chairman of
China's sovereign wealth fund, the China Investment Corporation, Jin
Liqun, told the World Economic Forum in Davos: "I am a little bit
worried."
"There will be no winners in currency wars. But it is important for a
central bank that the money goes to the right place," Li said.
Speaking at the same session, French Finance Minister Pierre Moscovici
voiced concern that the euro was becoming overvalued as a result of
quantitative easing and other stimulus actions taken by other nations'
central banks.
"Certainly, the level of the euro is high and creates some problem," he
said, attributing the single currency's recent gains partly to the return
of confidence created by the European Central Bank and euro zone
governments in starting to overcome Europe's debt crisis.
Source: Reuters
So first Germany begins pulling its Gold reserves from the US, and now China
and the EU are saying publicly that the Fed’s policies are damaging
confidence in the US Dollar.
This does not bode well for the financial system. The primary role of
Central Banks is to maintain confidence in the system. If the Central Banks
begin to turn on one another it is only a matter of time before the system
breaks down.
Remember, every time the Fed debases the US Dollar it forces the Euro and
other currencies higher, hurting those countries’ exports. The Fed has
recently announced it will be printing $85 billion every month until
employment reaches 6.5% (obviously the Fed is ignoring the mountains of data
that indicate QE doesn’t create jobs).
How long will the other Central Banks tolerate this before they initiate a
currency war? Both Germany and China have fired warning shots at the Fed.
And we all know that just beneath the veneer of goodwill, tensions are
building between the primary players of the global financial system.
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Graham Summers
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