Friday, November 5, 2010
Michael Hudson explains why Federal Reserve will pump $600 billion more into the US economy and keep interest rates at historical low levels
This guy is, IMHO, the single best economist out there. Highly, highly recommended!
German Finance Minister Wolfgang Schaeuble said the US policy was "clueless" and would create "extra problems for the world".
South Africa's finance minister Pravin Gordhan warned that "developing countries, including South Africa, would bear the brunt of the US decision to open its flood gates without due consideration of the consequences for other nations." The US policy "undermines the spirit of multilateral co-operation that G20 leaders have fought so hard to maintain during the current crisis," he said.
"If the domestic policy is optimal policy for the United States alone, but at the same time it is not an optimal policy for the world, it may bring a lot of negative impact to the world," said Mr Zhou (China's Central Bank head Zhou Xiaochuan)
"There is a spill over."
China's Vice Foreign Minister Cui Tiankai said the Federal Reserve had the right to take steps without consulting other countries beforehand, but added: "They owe us some explanation."
Germany's finance minister Wolfgang Schaeuble said on German television that "with all due respect, US policy is clueless."
"It is not that the Americans have not pumped enough liquidity into the market and now to say let's pump more into the market is not going to solve their problems."
On Thursday, Brazil's finance minister Guido Mantega had warned that the Fed's move would hurt Brazil and other exporters.
The latest move by the Fed has been dubbed QE2 as it follows the central bank's decision to pump $1.75tn into the economy during the downturn in its first round of quantitative easing.