azizonomics.com / By John Aziz / January 30, 2013
What does it mean that China are making a lot of noise about the Federal Reserve’s loose monetary policy?
A senior Chinese official said on Friday that the United States should cut back on printing money to stimulate its economy if the world is to have confidence in the dollar.
Asked whether he was worried about the dollar, the chairman of China’s sovereign wealth fund, the China Investment Corporation, Jin Liqun, told the World Economic Forum in Davos: “I am a little bit worried.”
“There will be no winners in currency wars. But it is important for a central bank that the money goes to the right place,” Li said.
At first glance, this seems like pretty absurd stuff. Are we really expected to believe that China didn’t know that the Federal Reserve could just print up a shit-tonne of money whenever it liked? Are we really expected to believe that China didn’t know that given a severe economic recession that Ben Bernanke would throw trillions and trillions of dollars new money at the problem? On the surface it would seem ike the Chinese government has shot itself in the foot by holding trillions and trillions of dollars and debt instruments denominated in a soft currency that can be easily depreciated. If they wanted hard assets, they should have bought hard assets.