Fed, ECB throwing world into chaos: Stiglitz

fighton

from Yahoo: "he U.S. dollar has weakened about 6.5 percent against a basket of major currencies since the beginning of September "

On Tuesday October 5, 2010, 5:37 pm
By Walter Brandimarte

NEW YORK (Reuters) - Ultra-loose monetary policies by the Federal Reserve and the European Central Bank are throwing the world into "chaos" rather than helping the global economic recovery, Nobel Prize-winning economist Joseph Stiglitz said on Tuesday.

A "flood of liquidity" from the Fed and the ECB is bringing instability to foreign-exchange markets, forcing countries such as Japan and Brazil to defend its exporters, Stiglitz told reporters in a conference at Columbia University.

"The irony is that the Fed is creating all this liquidity with the hope that it will revive the American economy," Stiglitz said. "It's doing nothing for the American economy, but it's causing chaos over the rest of the world. It's a very strange policy that they are pursuing."

The U.S. dollar has weakened about 6.5 percent against a basket of major currencies since the beginning of September as prospects for further monetary easing by the Fed have led investors to seek higher returns elsewhere.

That flow of dollars caused currencies to appreciate in many emerging market countries such as Brazil, which offers strong growth prospects. The Japanese yen has also hit record highs against the dollar on expectation of additional greenback weakness.

Recent actions by those countries to curb the strength of their currency were "necessary," Stiglitz added.

"It's natural in that context for them to say -- we can't just let our exchange rates appreciate and destroy our exports," he said.

On Monday, Brazil doubled a tax on foreign investment into local government bonds, while Japan lowered the target for its benchmark interest rate to a range between zero and 0.1 percent.

The Bank of Japan also pledged to buy 5 trillion yen ($60 billion) worth of assets, in a strategy similar to the one adopted by the Fed to pump funds into the economy.

But additional monetary stimulus will "clearly" not solve the problems caused by lack of global aggregate demand, Stiglitz said.

"Lowering the interest rates may help a little bit, but that's much too weak to address the problems facing the United States and Europe," Stiglitz said. "We need fiscal stimulus."

(Reporting by Walter Brandimarte; Editing by Jan Paschal)

Cobra

Who cares, 反正2012年地球就玩玩了。

ByStander

Who cares, 反正2012年地球就玩玩了。
Cobra 发表于 2010-10-5 18:06

    那你挣了钱还数的那么认真

fighton

Who cares, 反正2012年地球就玩玩了。
Cobra 发表于 2010-10-5 18:06

  Then we should enjoy life, no stock, no work, just do evil

Whigs

China Has Lost Over $100 Billion In Dollar-Adjusted Terms On Its UST
Holdings In A Few Short Months

At the end of July, which was the most recent TIC data update, China owned $
847 billion in US Treasury bonds. Since then, the world's reserve currency,
which is what said Treasuries are denominated in, has lost 4.7%, or $40
billion in real terms. Yet an even more jarring observation is that from its
June highs, the USD has dropped 12.4%. Expressed in real terms from the
perspective of China's State Administration of Foreign Exchange, this means
that US's biggest creditor has lost over $100 billion when adjusted for the
purchasing power loss in the dollar.

buhutong

good