My comment: PBoC focusses on financial policy, therefore its analisys is purely financial, not scoping economy as a whole. However, its main conclusion predict and warn how financial policies might influence economies.
I want to highlight some conclusions. First of all the main warning: "Prices of primary products and assets may rebound quickly once investor confidence is restored". The risk is there. In my opinion, more than a risk it is a prediction. It will happen unless we do something to avoid it. In fact, it is happening already. Step by step commodities raise. Yet slowly because we are either in the second phase of the U or in the third phase. Once all economies and mainly US economy passes to third phase those prices will raise sharply unless we do something such as what we have talked here. Secondly a special warn addressed in particular to US authorities. "The quantitative easing policy meant increasing currency supply through purchasing mid- and long-term treasury bonds after central banks cut interests rates to near zero. The extraordinary monetary policy harbored huge risks for international financial markets and the global economy". Adding that "massive purchase of mid- and long-term treasury bonds may keep yield at a low level. But in the long run, as the financial markets returned to stability and the economy recovered, inflation expectations would grow, interest rates would rise, and bond prices would adjust sharply". This mistake mounts on the risk or prediction cited firstly making US dollar denominated basic goods as the main target of inflationary risks or predictions. If US authorities learn from the recent past, they will realize that the main victim of their mistakes will not be "the rest of the world" as it was in the past, but "American householders". Thirdly and this for China in particular, "China would stick to its moderately easy monetary policy and ensure "ample" liquidity at banks" once we see that both economic policies (stimulous plan) and that moderately easy monetary policy made that economy is doing better than expected by some. Peace and best wishes. Xi China central bank pledges "ample" liquidity to sustain growth http://news.xinhuanet.com/english/2009-05/06/content_11325329.htm --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Google Groups "World-thread" group. To post to this group, send email to [email protected] To unsubscribe from this group, send email to [email protected] For more options, visit this group at http://groups.google.com/group/world-thread?hl=en -~----------~----~----~----~------~----~------~--~---
