Kucinich: The Federal Reserve Is Paying Banks NOT to Make Loans
July 28th, 2009What would happen if the banks did lend out that money? Inflation would explode and the Chinese would spit the dummy:
China’s government remains “concerned” about the value of its U.S. assets, a Finance Ministry official said on the first day of bilateral talks with his counterparts in Washington.
“China has a huge amount of investment in the U.S., mainly in the form of Treasury bonds,” Assistant Finance Minister Zhu Guangyao said in a press briefing with reporters. “We are concerned about the security of our financial assets.”
Zhu’s comments follow repeated public assurances by Treasury Secretary Timothy Geithner that the Obama administration is committed to reining in a record budget deficit once an economic recovery is secured. China is the largest foreign investor in U.S. government debt, and any drop in its demand could threaten higher borrowing costs.
Zhu also said that China favors a “stable” dollar, indicating one source of concern is any collapse in the value of the U.S. currency. The dollar has dropped about 3.5 percent against the currencies of major trading partners so far this year, according to a Federal Reserve index, and has depreciated about 18 percent in the past eight years.
And lookee here: It’s another week and another record debt offering by the U.S. Treasury. The best overall metric to keep an eye on is the U.S. Dollar Index.
It’s another week and that means another record U.S. debt offering. Let’s see how it goes.
