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American Stimulus Pump - Start of controls and protectionism ?
USA 600 billion pump plan will create disastrous bubbles in many nations across
the globe with hot money flooding stocks and properties with nations falling in domino
pattern once the hot money withdraws.
Hong Kong. A worried China on Friday led an Asian backlash against measures by the United States to kick start economic recovery, which have stoked concerns that a flood of loose money could destabilize regional economies.
The Federal Reserve said on Wednesday that it would pump $600 billion into the economy through debt purchases — effectively printing money — to boost employment and growth.
But many nations fear the effects of extra cash pumping through the financial system — as traders seek a better return on their dollar than they would get in the West.
Stock markets, which made big gains in recent weeks as traders anticipated the stimulus, surged on Thursday and Friday on the news.
But the plan also prompted warnings of a wave of protectionism and capital control measures by Asian nations to stave off so-called hot money, potentially inflaming tensions ahead of next week’s Group of 20 summit in South Korea.
Xia Bin, of the Chinese central bank’s monetary policy committee, branded the stimulus plan “abusive” and warned it could spark a new global downturn.
“If there is no restraint in issuing major global currencies such as the US dollar, the occurrence of another crisis is inevitable,” said Xia, as quoted by Beijing News.
Xia called on developing countries to impose capital control measures to “prevent hot money inflows from impacting their economy.”
USA 600 billion pump plan will create disastrous bubbles in many nations across
the globe with hot money flooding stocks and properties with nations falling in domino
pattern once the hot money withdraws.
Hong Kong. A worried China on Friday led an Asian backlash against measures by the United States to kick start economic recovery, which have stoked concerns that a flood of loose money could destabilize regional economies.
The Federal Reserve said on Wednesday that it would pump $600 billion into the economy through debt purchases — effectively printing money — to boost employment and growth.
But many nations fear the effects of extra cash pumping through the financial system — as traders seek a better return on their dollar than they would get in the West.
Stock markets, which made big gains in recent weeks as traders anticipated the stimulus, surged on Thursday and Friday on the news.
But the plan also prompted warnings of a wave of protectionism and capital control measures by Asian nations to stave off so-called hot money, potentially inflaming tensions ahead of next week’s Group of 20 summit in South Korea.
Xia Bin, of the Chinese central bank’s monetary policy committee, branded the stimulus plan “abusive” and warned it could spark a new global downturn.
“If there is no restraint in issuing major global currencies such as the US dollar, the occurrence of another crisis is inevitable,” said Xia, as quoted by Beijing News.
Xia called on developing countries to impose capital control measures to “prevent hot money inflows from impacting their economy.”
