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Do you really think that the US Federal Reserve System, which sets monetary policy based on very reasonable inflation and unemployment targets, is equivalent to

Do you really think that the US Federal Reserve System, which sets monetary policy based on very reasonable inflation and unemployment targets, is equivalent to a full-blown nationalist-controlled central bank, that is devaluing its currency to support a mercantilist agenda? I think it's pretty clear that China is able and willing to devalue far more than would be possible or palatable for the Fed.

paganel 7y ago
Not the OP but I personally do think that, yes. I personally do not find that much of a difference between Draghi's 2012 "whatever it takes" message (and ECB's subsequent actions) and currency moves like the ones carried out lately by the Chinese. Granted, the Fed has not yet hired any helicopter for its boss to throw money out of but some of its post-2009 actions (like the well-known QE) were pretty much the same thing. I personally find no big difference between QEs involving trillions of dollars or euros and controlling one's currency like China just did.
- Areading314 7y ago
  QE was a response to deflationary pressures related to massive deleveraging after the financial crisis. Inflation has barely touched 2% since then, and there was no devaluation of the dollar against foreign currencies. In fact the dollar has been appreciating against most other major currencies.
  - paganel 7y ago
    >and there was no devaluation of the dollar against foreign currencies. There was certainly a strong over-valuation of the economic entities whose bonds the ECB bought (I think the Fed did a similar thing, not 100% sure as I live in Europe and I follow ECB's policies more closely). Had the ECB not bought those bonds then maybe the Chinese companies would have been able to buy even more stuff in Europe, as things stood they were only able to purchase the Piraeus port (because the Greeks were basically in default) and some other lesser assets. That's still economic protectionism.

paganel 7y ago

Not the OP but I personally do think that, yes. I personally do not find that much of a difference between Draghi's 2012 "whatever it takes" message (and ECB's subsequent actions) and currency moves like the ones carried out lately by the Chinese. Granted, the Fed has not yet hired any helicopter for its boss to throw money out of but some of its post-2009 actions (like the well-known QE) were pretty much the same thing. I personally find no big difference between QEs involving trillions of dollars or euros and controlling one's currency like China just did.

Areading314 7y ago
QE was a response to deflationary pressures related to massive deleveraging after the financial crisis. Inflation has barely touched 2% since then, and there was no devaluation of the dollar against foreign currencies. In fact the dollar has been appreciating against most other major currencies.
- paganel 7y ago
  >and there was no devaluation of the dollar against foreign currencies. There was certainly a strong over-valuation of the economic entities whose bonds the ECB bought (I think the Fed did a similar thing, not 100% sure as I live in Europe and I follow ECB's policies more closely). Had the ECB not bought those bonds then maybe the Chinese companies would have been able to buy even more stuff in Europe, as things stood they were only able to purchase the Piraeus port (because the Greeks were basically in default) and some other lesser assets. That's still economic protectionism.