China's Warnings

[Mr. T]

China warns Federal Reserve over 'printing money'

China has warned a top member of the US Federal Reserve that it is increasingly disturbed by the Fed's direct purchase of US Treasury bonds.

 

 

Richard Fisher, president of the Dallas Federal Reserve Bank, said: "Senior officials of the Chinese government grilled me about whether or not we are going to monetise the actions of our legislature."

 

"I must have been asked about that a hundred times in China. I was asked at every single meeting about our purchases of Treasuries. That seemed to be the principal preoccupation of those that were invested with their surpluses mostly in the United States," he told the Wall Street Journal.

 

His recent trip to the Far East appears to have been a stark reminder that Asia's "Confucian" culture of right action does not look kindly on the insouciant policy of printing money by Anglo-Saxons.

 

Mr Fisher, the Fed's leading hawk, was a fierce opponent of the original decision to buy Treasury debt, fearing that it would lead to a blurring of the line between fiscal and monetary policy – and could all too easily degenerate into Argentine-style financing of uncontrolled spending.

 

However, he agreed that the Fed was forced to take emergency action after the financial system "literally fell apart".

 

Nor, he added was there much risk of inflation taking off yet. The Dallas Fed uses a "trim mean" method based on 180 prices that excludes extreme moves and is widely admired for accuracy.

 

"You've got some mild deflation here," he said.

 

The Oxford-educated Mr Fisher, an outspoken free-marketer and believer in the Schumpeterian process of "creative destruction", has been running a fervent campaign to alert Americans to the "very big hole" in unfunded pension and health-care liabilities built up by a careless political class over the years.

 

"We at the Dallas Fed believe the total is over $99 trillion," he said in February.

 

"This situation is of your own creation. When you berate your representatives or senators or presidents for the mess we are in, you are really berating yourself. You elect them," he said.

 

His warning comes amid growing fears that America could lose its AAA sovereign rating.

 

 

We will all soon see deflation in property value if we continue to keep printing money, and our good ole communist buddy China will be right there for the cleanup of buying up everything here in america.

[ballpeen]

People can say what they want to make us feel good, but the real value of property is already decreasing.

 

My bet is it drops another 20% over the next 5 years.

 

Every time people sell at a reduced price, the new benchmark is set. You want to sell your home?? You better price it below what your neighbor is asking for theirs. Multiply that millions of time over across the land and we haven't come close to where values are finally going to settle.

 

In all honesty, this is a long time coming.

 

To bad lot's of people are going to get burned along the way.

 

I too believe in Schumpeterian thinking in that the market is going to cycle. You can artificially buttress components of a economy, but sooner or later it is going to cycle, and if you have constantly delayed the inevitable, you end up with a bubble burst. This bubble still has lots of air in it. We may be able to let the air out slowly to prevent a total crash all at once, but we still have a long way to go before it is deflated.

 

In other words, I wouldn't buy a home right now. Values are still going to drop a significant amount.

[Mr. T]

People have to eat live pay bills, if they are out of work and cannot provide, then you will see that this is going to be a buyers market. Not everyone will be able to tough it out.

 

[ballpeen]

It is a buyers market now, but for the reasons I mentioned, it isn't a good time to buy unless you plan to live in the home for 25 years.

 

The prices will continue to drop below what people are going to pay for the next 5 years....maybe more.