In These New Times

A new paradigm for a post-imperial world

Challenge of turning off America’s ‘loose money’ tap

Posted by seumasach on August 4, 2013

QE, or the systematic devaluation of what is still the world’s reserve currency, is increasingly unacceptable to the rest of the world. It has lead to speculative bubbles in commodities and food leading to inflation and widespread unrest as seen in Egypt, Turkey, Brazil etc.. If Obama wishes to engage constructively with the rest of the world he needs to taper-off QE. Otherwise China and others will intensify efforts to bypass the dollar in international trade isolating the US. This is the worst option for America whereas the raising of interest rates and the very hard landing accompanying it can be mitigated by strategic partnerships, particularly with China, leading to growing direct investment in the US and controlled dollar devaluation within context of a reformed global monetary system. In this way Obama can lead the way in managed US decline in a new multipolar framework.

Telegraph

3rd August, 2013

Each month this year, via its quantitative easing programme, the Federal Reserve has been buying up $85bn (£55.8bn) of financial assets – a mix of US Treasuries and mortgage-backed securities.

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