Posts Tagged ‘stephen a. roach’

The U.S. and the Dollar in numbers; how crazy, you decide

April 8th, 2010 8 comments

$1.4 trillion out of thin air

The U.S. government has created out of thin air (“manipulated” into existence if you prefer) $1.4 trillion since September 2008 (around the time of the financial crisis) to March 2010.  (Source: U.S. Fed.) In December 2008, James Grant wrote an article in the WSJ criticizing the Fed “printing like mad … and is the wrong approach with potentially dire consequences.”

What’s the point? Everyone who hold assets denominated in dollar are immediately going to have their wealth diluted in proportion to the amount “printed” (it’s computer based now, and so the physical printing is no longer necessary).  China and Japan are the two largest foreign holders of American debt,  so the value of their holdings decrease.  The vast majority of holders of dollar denominated assets are in fact Americans.  Their purchasing power is now reduced.  Who is “manipulating” who?

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