Recently, the US Fed Reserve has decided to continue their liberal monetary policy (money printing + low interest rates) which they started 5-6 years back.
Financial Thoughts agree with Marc Weber (correctly pointed out some of the stock market crashes in the past) when he says
"I believe that the market is slowly waking up to the fact that the Federal Reserve is a clueless organization," Faber said. "They have no idea what they're doing. And so the confidence level of investors is diminishing, in my view."
The consequence of the note printing (QE) is that there is temporary boom in the US economy. China is the biggest taker of such notes as it holds USD 3 trillion (& China has its own justifications). You can also repeat this to boost your economic (financial) position by printing IOU notes to suppliers of various goods (house, cars, etc) to you. Only thing is that your creditor shall hold it in their reserves and shall not make a claim on you. That is what China is doing - the moment China decides to liquidate US Dollar holdings, that will cause the world to witness something no-one in the economics or finance has seen. Probably, that may even lead to World War III
Let us focus on Marc Weber views on US Fed policies and its consequences. Whilst China may decide to hold on to its IOU notes from USA ad infinitum, such policies will have its own consequences in the near term
Weber goes on to add that as investors adjust to this fact, and valuations shrink, he predicts a massive decline in the market. He predicts 30% correction in US Stock Market in 2014 - this is not good news for world markets (including India) as the global financial markets are inter-connected.
That's where we can understand the question Rajan asked Ben Benarke in a recently gathering of Central Banks. Rajan asks an interesting question
"If the (Fed) policy hurts the rest of the world more than it helps the United States, should this policy be pursued?"
It is reported that Bernanke was upset - he got even more upset when Rajan mentioned that the benefits of QE will be less clear if its prolonged. Bernanke said something that Rajan and emerging market economies are worried about their exchange rates & according to him, the QE which is a monetary policy may not be mixed up with Foreign exchange policy.
However, Financial Thoughts believe it is better to listen to Rajan, who had correctly predicted the consequences of liberal monetary policy of Allan Greenspan before the Great Crash of 2008.
.........................................................
Our Expert Professionals includes Chartered Accountants, PhD and Lawyers
Financial Thoughts agree with Marc Weber (correctly pointed out some of the stock market crashes in the past) when he says
"I believe that the market is slowly waking up to the fact that the Federal Reserve is a clueless organization," Faber said. "They have no idea what they're doing. And so the confidence level of investors is diminishing, in my view."
The consequence of the note printing (QE) is that there is temporary boom in the US economy. China is the biggest taker of such notes as it holds USD 3 trillion (& China has its own justifications). You can also repeat this to boost your economic (financial) position by printing IOU notes to suppliers of various goods (house, cars, etc) to you. Only thing is that your creditor shall hold it in their reserves and shall not make a claim on you. That is what China is doing - the moment China decides to liquidate US Dollar holdings, that will cause the world to witness something no-one in the economics or finance has seen. Probably, that may even lead to World War III
Let us focus on Marc Weber views on US Fed policies and its consequences. Whilst China may decide to hold on to its IOU notes from USA ad infinitum, such policies will have its own consequences in the near term
Weber goes on to add that as investors adjust to this fact, and valuations shrink, he predicts a massive decline in the market. He predicts 30% correction in US Stock Market in 2014 - this is not good news for world markets (including India) as the global financial markets are inter-connected.
That's where we can understand the question Rajan asked Ben Benarke in a recently gathering of Central Banks. Rajan asks an interesting question
"If the (Fed) policy hurts the rest of the world more than it helps the United States, should this policy be pursued?"
It is reported that Bernanke was upset - he got even more upset when Rajan mentioned that the benefits of QE will be less clear if its prolonged. Bernanke said something that Rajan and emerging market economies are worried about their exchange rates & according to him, the QE which is a monetary policy may not be mixed up with Foreign exchange policy.
However, Financial Thoughts believe it is better to listen to Rajan, who had correctly predicted the consequences of liberal monetary policy of Allan Greenspan before the Great Crash of 2008.
.........................................................
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