Facing a still climbing unemployement rate and the lack of growth, the Federal Reserve System of the United States decided on November 4th to pump an extra 600 billion US dollars into its economy over the next eight months. It is using the dollar's confidence that is left, risking to contaminate the world with funny money. On what reality are these 600 billion based? How to create so much wealth artificially? Since 1971, the convertibility of the dollar to gold has been largely forgotten and it is now hard to tell wether there is a boundary or not. The americans might think that their role as the "world's policeman" gives them the ultimate right to use its reference currency whenever they want. But the chinese who are the largest Dollar holders in the world might give a slightly different answer one day
Lets look closer at what the official newspaper "China Daily" has to say about this decision (The full Article can be found here) :
"The fresh round of quantitative easing launched by the US Federal Reserve Board (Fed) shows that the world's biggest economy, instead of abstaining, has become even more addicted to abnormally cheap credit
Emerging market economies, the main engine of global growth, should take action to prevent the flood of cheap US money from sending their domestic inflation through the roof. [...]
It is irresponsible for the country with the world's major reserve currency to uphold the motto of "our currency, your problem". Nor is it fair for a rich economy to dilute its debts at the cost of the stability of the global economy and financial system, with developing countries bearing the brunt of its impact.'
The tone is getting much tougher before the next G20 in Seoul...