U.S. Democratic Party new channels, gave up the ass image, but under the rule of the Federal Reserve short-term or difficult to change the donkey temperament – simple and crude. Bernanke, a scholar is an important research topic during the economic crisis, he believes the economic crisis of the tactics the government is pouring money sitting in the helicopter above, and now Bernanke have the opportunity to apply what they learn, has also taken a nice move name, called quantitative easing.

What is the quantitative easing? Printing money is also! No drop in interest rates have come down the case, the monetary authorities expand the money is the only tool for direct printing money, but the hysteria has long been the policy options under the policy proved to be the next. During the Great Depression have Americans saved veering Cairns created a “liquidity trap” concept, that is the period when interest rates are low enough, regardless of the monetary authorities released much money, they can not stimulate aggregate demand, money is like out into the trap. Today, the U.S. economy is suffering in this great struggle in the trap, but since the ratio of Jingwei Bernanke, should fill the sea.

Quantitative easing will lead to price increases

The Fed released a bottomless pit of money will not be honest and stay inside, in the pursuit of profit, driven by instinct, the liquidity will be trying to find profit opportunities, the result can only be a price increase. Price includes two aspects, first, rising commodity prices, inflation may be brought; Second, asset price inflation, asset bubbles can be made.

According to ANZ Liu Ligang, director of the China Economic Research, the global economy because of the weak dollar will bring the prices of commodities and agricultural products face a more serious risk of inflation, although this is expected from the extent consistent with the Fed, but for economic performance better economies of Asia and Oceania economies, rising inflation may lead to more serious problems.

He argued that long-term interest rates by lowering the Fed intended to stimulate the economy, the dollar will further flattening the yield curve, the dollar’s low interest rates will last longer, which would lead to the U.S. dollar and other currencies interest rate further. The carry trade against the dollar will gradually rise, this will bring a global cross-border capital flows. Now it seems that the global speculative capital is still popular in Asia and Oceania economies, massive capital inflows not only bring the appreciation of the currency will also bring local asset prices.

Fundamental strategy is to adjust the economic structure

The face of the Fed’s negative impact on the quantitative easing policy, the Chinese how to deal with? Wang Tao, chief China economist at UBS suggested that China should first strengthen controls on capital inflows, while relaxation of capital outflow controls. Capital controls have never been perfect, but in the short term to ward off the most vulnerable of repeated short-term capital flows, greatly reducing the overall capital inflow. This can be as effective implementation of other policies provides a breathing space.

In monetary policy, independent economist Andy Xie believes that emerging economies must act decisively to raise interest rates, cooling inflation, eliminate asset bubbles. Ten years ago, the bubble burst almost killed all the emerging economies. Andy Xie warned that if the bubble burst again, they might thus perish. Economic crisis, the bubble burst led to political unrest. The interaction between the economy can in a very long period of time a standstill.

Quantitative easing and the Fed means of defense in emerging economies are temporary, the real fundamental strategy is to adjust the economic structure. China needs to change to rely on investment and export-led growth model, you need to jump out of the United States rely on over-borrowing and over-consumption of the set pattern. Although the transition is painful, transition to sacrifice some growth, but China’s decision-making authority is clearly determined, it is necessary to deepen the transformation of economic development. In contrast the United States, more to borrow money, more consumption of the old road continues, the monetary authorities also to energize this model. However, the note-issuing country can not be used without the dividend, just as the only one opposed to quantitative easing FOMC members – Kansas City Fed President Thomas. Huo Lige said, to continue at a high level of monetary accommodation of the increased risk of future financial imbalance will result in the long term inflation expectations rise, have shaken the economy.

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