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China Just Threatened a Currency War if the Fed Doesn't Stop Printing

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The tension between Central Banks that we noted yesterday continues to worsen. This time it was China and the EU, not just Germany, that fired warning shots at the US Fed.

A senior Chinese official said on Friday that the United States should cut back on printing money to stimulate its economy if the world is to have confidence in the dollar.

Asked whether he was worried about the dollar, the chairman of China's sovereign wealth fund, the China Investment Corporation, Jin Liqun, told the World Economic Forum in Davos: "I am a little bit worried."

 

"There will be no winners in currency wars. But it is important for a central bank that the money goes to the right place," Li said.

 

Speaking at the same session, French Finance Minister Pierre Moscovici voiced concern that the euro was becoming overvalued as a result of quantitative easing and other stimulus actions taken by other nations' central banks.

 

"Certainly, the level of the euro is high and creates some problem," he said, attributing the single currency's recent gains partly to the return of confidence created by the European Central Bank and euro zone governments in starting to overcome Europe's debt crisis.

 

http://www.reuters.com/article/2013/01/25/us-davos-currencies-idUSBRE90O10620130125

 

So first Germany begins pulling its Gold reserves from the US, and now China and the EU are saying publicly that the Fed’s policies are damaging confidence in the US Dollar.

 

This does not bode well for the financial system. The primary role of Central Banks is to maintain confidence in the system. If the Central Banks begin to turn on one another it is only a matter of time before the system breaks down.

 

Remember, every time the Fed debases the US Dollar it forces the Euro and other currencies higher, hurting those countries’ exports. The Fed has recently announced it will be printing $85 billion every month until employment reaches 6.5% (obviously the Fed is ignoring the mountains of data that indicate QE doesn’t create jobs).

 

How long will the other Central Banks tolerate this before they initiate a currency war? Both Germany and China have fired warning shots at the Fed. And we all know that just beneath the veneer of goodwill, tensions are building between the primary players of the global financial system.

 

We offer several FREE Special Reports to help investors navigate this risks and others in the financial system. They include:

 

Preparing Your Portfolio For Obama’s Economic Nightmare

 

How to Protect Yourself From Inflation

 

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Bullion 101: Everything You Need to Know About Investing in Gold and Silver Bullion…

 

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Best

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Tue, 01/29/2013 - 16:23 | 3196042 Ghordius
Ghordius's picture

Tradition

Tue, 01/29/2013 - 14:10 | 3195421 SafelyGraze
SafelyGraze's picture

"pay ZH for not publishing it"

zh zirp!

Tue, 01/29/2013 - 14:14 | 3195433 Ghordius
Ghordius's picture

I once asked Tyler in earnest how much would a share of ZH cost. I will never forget his classic answer: more

Tue, 01/29/2013 - 16:49 | 3196140 rhinoblitzing
rhinoblitzing's picture

"more" ...

what? $, GLD, Oil, ????

Tue, 01/29/2013 - 12:22 | 3195046 Fizzywig
Fizzywig's picture

You mean to tell me China (and the rest of the world for that matter), has not been engaging in currency wars?

The FED has openly threatened China if they don't allow their currency to rise against the dollar.  This was news a few months back.

It is a big game of musical chairs at this point, when the music stops, those who aren't holding anything physical will be left without a chair.

Tue, 01/29/2013 - 14:34 | 3195537 sunnydays
sunnydays's picture

China came out and said today Global Reserve Currency for the Yuan on a chinese news site.  They are testing cross border loans to make the Yuan a Global Reserve Currency.  They also had Unloved Dollar on the same site.  China is fed up with the U.S. and the money printing.  

http://sherriequestioningall.blogspot.com/2013/01/chinese-news-article-c...

Tue, 01/29/2013 - 15:56 | 3195926 LawsofPhysics
LawsofPhysics's picture

So let the Yuan appreciate, go ahead motherfuckers, I dare you.  Must be why all those chinese mothers are coming to america to have their babies then - FAIL.

Tue, 01/29/2013 - 17:56 | 3196434 batterycharged
batterycharged's picture

Yeah, no kidding LOL.

It's like the black dude in Blazing Saddles with a gun to his own head "I'm gonna do it! Back off or the nigga gets it"

China is mad because they are sick of buying up our debt to keep our currency up. And we just keep printing.

Thanks for the cheap goods China! Now eat our shitty currency, lmao!

China is fucked, we're fucked. It's a stand off, no one is flinching.

 

Tue, 01/29/2013 - 17:44 | 3196391 The Heart
The Heart's picture

"Must be why all those chinese mothers are coming to america to have their babies then - FAIL."

Darn! Those inscrutable red hoarders...who'duh thunk they be sneaking in and having da anchor babies here also to add to the many other ways they have infiltrated the Americas for the final take over and surprise attack? Wowie!

FAIL? In the mind of Maurice Strong, all is going according to der plan. Ja mein Herr!!

Tue, 01/29/2013 - 17:50 | 3196416 LawsofPhysics
LawsofPhysics's picture

FAIL? In the mind of Maurice Strong, all is going according to der planJa mein Herr!!

-----

 

Indeed, and how did things work out for Maurice again?

Tue, 01/29/2013 - 13:55 | 3195369 Ghordius
Ghordius's picture

perhaps Timmah should go to China and explain to an audience made of Chinese economics students how the US Treasury is in pursuit of a strong Dollar policy

oh, wait...

Tue, 01/29/2013 - 20:08 | 3196920 Buck Johnson
Buck Johnson's picture

Yep and we know how that went, lolololololol.  Yes China is manipulating their currency but he US is also.  What this is all about is the fact that the game is about to end and central banks are gettting ready to position themselves for the new type of currency that will be used for international commerce.

Tue, 01/29/2013 - 17:06 | 3196217 SAT 800
SAT 800's picture

Shorting the Euro/USD pair today at 1.3504; reversion to the mean is the expected behaviour; now, not more of this "the problem is solved crap". The Euro problem will be solved when Greece has a Drachma and Germany has their own currency, etc. It was invented to allow French Socialists to play make believe; make believe is now over. It will go down in history as an interesting example of mass hypnosis.

Tue, 01/29/2013 - 18:01 | 3196452 The Heart
The Heart's picture

"It will go down in history as an interesting example of mass hypnosis."

Curious sir, would that be before, or after the killing off of 98% of everything that is biological in nature and the electronic tax and trade money system that is implemented in the new world-wide disorder?

Tue, 01/29/2013 - 14:32 | 3195511 sessinpo
sessinpo's picture

Oh wait,

 

You forgot Timmah isn't Secretary or oh wait, everyone knows better? And by the way, the ultimate value of a currency will occur despite government. A strong dollar is unavoidable in an environmnent with overwhelming US dollar denominated debts. Pure logic.

Wed, 01/30/2013 - 00:16 | 3197745 tango
tango's picture

sessinpo - You may get "downed" by the posters but you are right -  the dollar will not only survive but become stronger due to its role as world currency.  As Kyle Bass says repeatedly, crashes come not from the lowest point but the highest.  The ONLY way I see a dollar falling in value relative to other currencies is if China were to start selling dollars.  I am sure this has been a topic in Chinese circles - when is the time to absorb a trllion dollar loss and take the US down.   Many of the doomsayers have come around to the idea that in a world of punished, bloated currencies the dollar will do well precisely because of US dollar denominated debt.  

Thu, 01/31/2013 - 20:39 | 3204570 sessinpo
sessinpo's picture

tango

 

I thank you for not agreeing with me. I thank you for presenting dialogue for discussion. Quite frankly, I'm getting to the point where I am almost done with ZH. I have done numerous posts of content and the response I get is the typical liberal attacks. Personal, nothing of substance.

 

No one want discussion. No one wants debate  because on the opposing side, the liberals and those that give me down arrows, they have no substance and nothing to contribute but personal attacks and calling everything bitchez.

 

Give me a break. No, on the other hand, as a libertarian, I'LL TAKE MY BREAK.

 

I've got my assets, I've got my PM's, I've got my guns and ammo to protect it.  But most importantly, I have the sense of self responsibility. Quite frankly, I've about done trying to PROVOKE discussion and exchange of ideas. I've got many more things to do then to try to help liberals. Let them die, they are the party of death. So be it.

Tue, 01/29/2013 - 16:22 | 3196029 Colonial Intent
Colonial Intent's picture

In case you missed it pyscholgy is now the motivating factor in economics, mathematic's don't get a look in these days.....

Tue, 01/29/2013 - 18:15 | 3196503 Radical Marijuana
Radical Marijuana's picture

That psychology is based on fraud, backed by force, requiring people to adapt to living inside of that. Mathematics tends not to lie, unless people use it for to back up their deceits, which, of course, is what "economics" primarily has become!

Jin Liqun, told the World Economic Forum in Davos: "I am a little bit worried."

Nothing comes out of Davos but the professional liars and immaculate hypocrites mostly agreeing with each other. The whole system is an hermetically sealed insanity, BECAUSE it is the runaway triumph of fraud backed by force. OF COURSE, the central bankers will start to squabble with each other more and more. Then, their already insane systems will become even more insane.

The return to "truth" is that money is backed by murder. The only way to understand our economic systems is that the debt controls were backed by death controls. That basic TRUTH is the thing that will never be allowed to be presented at a meeting like Davos, or similar meetings, where the relative elites that benefit from the established systems talk about tinkering with them.

The psychology was selected for within a human ecology system, through the history of militarism, resulting in the triumphs of organized crimes being able to create a system of legalized lies, backed by legalized violence. Nobody at Davos, or any similar meeting, is going talk about those issues more than obliquely, using elaborately coded language.

However, they actually ARE preparing for more genocidal wars, along with democidal martial law, because they do understand what they are actually doing. However, their status requires that they never publicly admit that. The only genuine solutions would be better murder systems, through radical paradigm shifts in militarism. The only genuine solutions must be basic monetary revolutions. Of course, nobody who benefits from the established systems, who are allowed to attend at meetings like at Davos, is going to ever admit that in any coherent ways.

There is no going backwards, although almost everyone still thinks backwards.

Wed, 01/30/2013 - 00:06 | 3197721 Seer
Seer's picture

RM, you ever catch any of Derrick Jensen? (End Game)

Tue, 01/29/2013 - 17:47 | 3196403 michael_engineer
michael_engineer's picture

Psychology, Yeah right. As if QE hasn't been the reason stocks advanced. I think the causal tie to money creation affecting market prices is much stronger than weak claims that psychology has much to do about it.

The underlying fundamentals almost always play a stronger roll.

http://ftalphaville.ft.com/files/2013/01/Perfect-Storm-LR.pdf

Tue, 01/29/2013 - 17:11 | 3196232 SAT 800
SAT 800's picture

Psychology is certainly what makes markets. And thinking about the psychology of crowds is certainly necessary to be profitable in taking positions in major markets. But it's not clear what you mean to indicate by economics. The study area, "economics" is entirely Math. driven; and mostly entirely wrong. Also, there are high paying jobs for top Math. Majors and Physics Majors, (also good at Math.), at the trading desks in Banks; where they do  very complicated things; whether or not these things are or should be called economics; I'm not sure.

Fri, 02/01/2013 - 14:56 | 3206920 Colonial Intent
Colonial Intent's picture

elias canetti

Tue, 01/29/2013 - 20:39 | 3197044 mjcOH1
mjcOH1's picture

"In case you missed it pyscholgy is now the motivating factor in economics, mathematic's don't get a look in these days.."

 

It's the new math. Equations are irrelevant and make people feel sad.   What matters is whether you feel good about yourself regardless of what your answer to the problem is.

Tue, 01/29/2013 - 15:36 | 3195843 JonNadler
JonNadler's picture

I love your logic

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