China alarmed by US money printing
Posted by iusbvision on September 8, 2009
China has threatened to stop buying US debt before and keeps moving closer and closer to making good on that threat. Hillary was sent to China to beg them to keep buying our debt.
By Ambrose Evans-Pritchard
Cheng Siwei, former vice-chairman of the Standing Committee and now head of China’s green energy drive, said Beijing was dismayed by the Fed’s recourse to “credit easing”.
“We hope there will be a change in monetary policy as soon as they have positive growth again,” he said at the Ambrosetti Workshop, a policy gathering on Lake Como.
“If they keep printing money to buy bonds it will lead to inflation, and after a year or two the dollar will fall hard. Most of our foreign reserves are in US bonds and this is very difficult to change, so we will diversify incremental reserves into euros, yen, and other currencies,” he said.
China’s reserves are more than – $2 trillion, the world’s largest.
“He who goes borrowing, goes sorrowing,” said Mr Cheng. It was a quote from US founding father Benjamin Franklin.
If our credit rating goes from AAA down to AA it will mean economic armageddon. World creditors have already threatened this against the US because of our bad borrowing and monetary policy. If you don’t understand why that would be armageddon feel free to ask in comments.