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And so it begins.
First there were rumblings from Asia:
BEIJING, Nov. 5 (Xinhua) â?? A senior Chinese foreign affairs official said Friday that the United States should explain its latest round of quantitative easing, urging it to take a responsible attitude as a major reserve currency issuing country.
â??For the Fedâ??s new relaxed monetary policy, many countries have expressed worries about what impact it would impose on financial stability,â? said Chinese Vice Foreign Minister Cui Tiankai at a news briefing.
â??The U.S. new monetary policy will affect not only emerging economies but also developed ones,â? Cui said.
And from Europe:
Nov. 5 (Reuters) Pumping more money into the economy will not solve the countryâ??s problems, he said, adding that the world needed U.S. leadership that was currently lacking.
â??With all due respect, U.S. policy is clueless,â? [German finance minister Wolfgang] Schaeuble said. â??(The problem) is not a shortage of liquidity. Itâ??s not that the Americans havenâ??t pumped enough liquidity into the market.â?
And, finally, (erm) even from the home front:
Nov. 7 (National Review Online) I'm deeply concerned about the Federal Reserve's plans to buy up anywhere from $600 billion to as much as $1 trillion of government securities [former Alaska governor, Sarah Palin will say in a Tuesday speech]. The technical term for it is "quantitative easing."? It means our government is pumping money into the banking system by buying up treasury bonds. And where, you may ask, are we getting the money to pay for all this? We're printing it out of thin air â?¦
The Fed's pump priming addiction has got our small businesses running scared, and our allies worried. The German finance minister called the Fed's proposals "clueless."? When Germany, a country that knows a thing or two about the dangers of inflation, warns us to think again, maybe it's time for Chairman Bernanke to cease and desist. We don't want temporary, artificial economic growth bought at the expense of permanently higher inflation which will erode the value of our incomes and our savings. We want a stable dollar combined with real economic reform. It's the only way we can get our economy back on the right track.
QE2 backlash? You betcha.
Related links: Obama defends QE ahead of G20 - FT Backlash against Fed's $600bn easing - FT Stock picking with Sarah Palin "â?? FT Alphaville, 2008
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