It was reported by Yahoo finance that the Federal Reserve announced plans Wednesday to buy up to 300 billion dollars in long-term US Treasury bonds over the next six months "to help improve conditions in private credit markets." I was so surprise to see the negative way it reported the news. Cause in China, ” ” can express an opposite opinion, and also can be an irony. It was obvious that Yahoo doubted the benefit U.S. would get compared with the troubles other countries may face. I will analyze it later.
However, the other Chinese media XINHUA reported it differently, it seemed that XINHUA was more care about U.S.’s economy, such as CPI and stock market. That may because XINHUA is a bog communication institution, It’s necessary for it to report the news neutral. The same comes to BLOOMBERG, It reported the influence home and abroad market neutrally.
While in Wall Street Journey, it indicated that It’s hard not to see the $300 billion payment by the Federal Reserve. Which means it fully support Fed decision, so it’s positive attitude.
Increase the money supply
The 300 billion spent in long-term T-bill will create the market liquidity immediately. That equals to printing the money without any back up, except for the government tax revenue as the mortgage for interest rate. What’s more, the central bank also said it was boosting its purchases of mortgage securities by 750 billion dollars, bringing its total to 1.25 trillion dollars this year as part of a wide-ranging effort to revive the sagging US economy.
Lower the long-run interest
Treasury 10-year note yields fell the most since 1962 as the Federal Reserve surprised investors with plans to purchase as much as $300 billion in government debt to drive consumer borrowing costs lower and lift the economy from recession.
The other advantage is lower the cost of borrowing the money from abroad. As we know, many trade surplus countries buy U.S, long-term bonds in order to pursue high return. And once the interest low down, it means the cost of borrowing decreases, considering the depreciate of U.S. Dollar, these countries may lose value!
However, the other Chinese media XINHUA reported it differently, it seemed that XINHUA was more care about U.S.’s economy, such as CPI and stock market. That may because XINHUA is a bog communication institution, It’s necessary for it to report the news neutral. The same comes to BLOOMBERG, It reported the influence home and abroad market neutrally.
While in Wall Street Journey, it indicated that It’s hard not to see the $300 billion payment by the Federal Reserve. Which means it fully support Fed decision, so it’s positive attitude.
Increase the money supply
The 300 billion spent in long-term T-bill will create the market liquidity immediately. That equals to printing the money without any back up, except for the government tax revenue as the mortgage for interest rate. What’s more, the central bank also said it was boosting its purchases of mortgage securities by 750 billion dollars, bringing its total to 1.25 trillion dollars this year as part of a wide-ranging effort to revive the sagging US economy.
Lower the long-run interest
Treasury 10-year note yields fell the most since 1962 as the Federal Reserve surprised investors with plans to purchase as much as $300 billion in government debt to drive consumer borrowing costs lower and lift the economy from recession.
The other advantage is lower the cost of borrowing the money from abroad. As we know, many trade surplus countries buy U.S, long-term bonds in order to pursue high return. And once the interest low down, it means the cost of borrowing decreases, considering the depreciate of U.S. Dollar, these countries may lose value!
Increase the price of resources
Gold rebounded from the biggest decline in two months after the Federal Reserve said it will buy Treasury securities and mortgage and agency debt to end the recession, renewing concern that inflation will accelerate. And consider devalue of U.S. Dollar, investors prefer hold hard currency, which made the gold price rise $50 Dollars during last week. As we know, U.S. hold 8500 Ton of gold reserve, the increase of price is really a good news for him.
Oil price also increased $5 per barrel last week.
Gold rebounded from the biggest decline in two months after the Federal Reserve said it will buy Treasury securities and mortgage and agency debt to end the recession, renewing concern that inflation will accelerate. And consider devalue of U.S. Dollar, investors prefer hold hard currency, which made the gold price rise $50 Dollars during last week. As we know, U.S. hold 8500 Ton of gold reserve, the increase of price is really a good news for him.
Oil price also increased $5 per barrel last week.
Dollar crush
The dollar was predictably crushed in the reaction to the Federal Reserve’s historic undertaken of quantitative easing.
The dollar was predictably crushed in the reaction to the Federal Reserve’s historic undertaken of quantitative easing.
Save domestic stock market, slump others
The Dow Jones rose 1.23 percent. The Standard & Poor's 500 index rallied 2.09 percent, and the Nasdaq gained 1. 99 percent. However, European stocks declined for a second day, led by raw- material producers, as crude oil and metals slipped and U.K. unemployment rose at the fastest pace since at least 1971.
Unfair to developing countries
U.S.’s stimulate plan has already driven the commodity price, which may make the living condition in developing countries even worse. The foreign reserve can be the trade surplus of the country for years, but will lose more than 20% just because of the financial crisis. The hard work will exchange for loss.
U.S.’s stimulate plan has already driven the commodity price, which may make the living condition in developing countries even worse. The foreign reserve can be the trade surplus of the country for years, but will lose more than 20% just because of the financial crisis. The hard work will exchange for loss.
American strategy
Don’t think U.S.’s strength will be weakened. Actually when seeing the history, every time America suffered deep recession, its hegemony would be consolidated. When the currency devalued, the export would increase. 1929 recession was like this. In 1985, Plaza Accord made Japan( the biggest creditor of U.S.) dead. So now, do you think the history repeats itself? Is the next aim China?
Don’t think U.S.’s strength will be weakened. Actually when seeing the history, every time America suffered deep recession, its hegemony would be consolidated. When the currency devalued, the export would increase. 1929 recession was like this. In 1985, Plaza Accord made Japan( the biggest creditor of U.S.) dead. So now, do you think the history repeats itself? Is the next aim China?
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