The Fed Began The Second Round Of "Banknote Printing" &Nbsp; &Nbsp; Quantitative Easing Hit The World.

To speed up the "slow disappointing" economic recovery.

According to the introduction, in addition to the $600 billion treasury bond, the Fed will also buy about $35 billion a month on the basis of its decision in August to replace mortgage-backed bonds.

Therefore, the Fed expects to buy $850 billion to $950 billion of treasury bonds before the end of the second quarter of 2011.

Experts point out that this is the first time that the Federal Reserve has used quantitative easing as a routine tool for monetary policy. If this tool is "normalized", it has put forward a long-term new topic for all governments.

In the statement, the Fed explained the reasons for formulating a new round of quantitative easing policy, including factors such as "slow recovery in production and employment, high unemployment rate, slow wage growth, low housing market" and other factors.

Market analysts believe that the Fed hopes to further lower the long-term interest rate of the United States, enhance inflation expectations, encourage enterprises to borrow and expand production, and promote employment and consumption, so as not to repeat the mistakes of Japan.

"Although the Fed has already put a lot of liquidity into the market, the effect of these policies has begun to gradually decrease and disappear, and the US economic recovery has also been somewhat weak. In order to avoid falling into recession again, the Fed can only implement the policy of quantitative easing again."

The Australian research bank released the 4 China study report.

However, there are not many people who are skeptical about the effectiveness of the Fed's new strategy, and there are also great differences within the open market committee of the Federal Reserve.

The Fed's statement said that the Federal Open Market Committee did not pass the monetary policy in a single vote, and Thomas M Hoenig voted against it.

"He believes that the risk of buying additional bonds is greater than that of returns," the statement said. "He also worries that the continued implementation of high intensity monetary regulation will lead to fiscal imbalance and increase the risk of long-term inflation expectations."

The Washington Post reported that the latest strategy of the Fed could not solve all the problems of the US economy.

The ultimate positive impact on the US economy depends on whether consumers and enterprises can respond to the decline in long-term interest rates.

If they continue to hold cash in hand, the positive impact of the Fed will be minimal.

"The Fed used interest rate adjustment tools before, but that only changed short-term interest rates.

When the financial crisis or economic fluctuations are relatively large, the central banks of developed countries are unable to change long-term interest rates, and the goal of quantitative easing is to reduce long-term interest rates.

In the future, it is possible for this tool to become a normal tool.

Because this means that the ability of the central bank to play its role is improved: not only can it affect short-term interest rates, it can also affect long-term interest rates. "

Shen Minggao, director and director general of Citigroup China investment research and analysis department, said in an exclusive interview with the economic reference daily.

Bernanke defended himself by saying that although asset purchase measures are an uncommon monetary policy, some concerns about the move have been exaggerated.

He also said the Fed is well prepared and believes it has the tools to lift monetary stimulus at an appropriate time.

Shen Minggao pointed out, "this is a very important commitment, but there are two questions to consider: first, if inflation starts to rise, but the economy has not yet fully recovered, is there a similar stagflation situation, will the Federal Reserve honor its commitments? Two, is there a time mismatch in the withdrawal of liquidity? In other words, when the Federal Reserve sees that inflation is rising, it may be too late to withdraw liquidity."

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Grim: US dollar continues to depreciate or trigger

The US Federal Reserve's US $600 billion national debt purchase plan is basically in line with market expectations.

Because the capital market and the foreign exchange market have been fully anticipated in the past month, the short-term impact on the market has not been great, and the price of gold futures has even fallen.

But at the time of the press release, the US dollar index dropped to a lowest level of 75.74, breaking its pre lows and hitting a 11 month low.

Analysts pointed out that from a relatively long period of time, the Fed's easing again means the continuation of the Fed's "weak dollar" policy. The dollar market will be lifted as a whole, and the global economy will face more severe inflation risks.

According to estimates from Bank of America and Merrill Lynch, the price of crude oil, copper and precious metals rose by about 15% after the first round of quantitative easing monetary policy triggered by the main global central bank after the collapse of Lehman Brothers.

After the Fed's resumption of quantitative easing, the Central Bank of other economies has yet to say that it will follow suit, but it has also made the market worry about the possible exchange rate war, and the fluctuation of the foreign exchange market may also push the capital into the commodity market.

Some analysts pointed out that the Fed's move means that the increase in the market supply of funds, resulting in a weaker dollar, which will be beneficial to all commodities. Any good basic commodity will be promoted, especially the tight supply of sugar, coffee and cotton.

In the long term, the new round of loose monetary policy of the Federal Reserve will also bring support to the gold market.

After the launch of the Federal Reserve's bond buying program, the possibility of crude oil futures breaking the $90 per barrel for the first time in 2008 has also increased.

However, some analysts believe that the possibility of a stronger US dollar in the future will still exist after the second round of quantitative easing monetary policy is implemented.

Yang Hui, general manager of CITIC Securities bond sales and trading department, pointed out that manufacturing inflation and currency depreciation are often important means to ease economic imbalances in the United States. After the goal of promoting exports and deflation through currency devaluation, the dollar may also be strong again.

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According to the Wall Street journal article, the Federal Reserve's new Treasury bond purchase plan aims at lowering the long-term interest rate and speeding up the growth of the US economy.

It means the Fed injected hundreds of billions of dollars into the world economy.

Quantitative easing is a new tool. It will have a greater impact on other countries through the pfer of liquidity.

The US now adopts such a large scale of quantitative easing, and there will be other countries' follow up possibilities in the future.

How to deal with this impact is a new topic for China and other emerging market countries.

Shen Minggao pointed out.

According to the China Research Report of the ANZ bank, rising inflation is likely to cause serious problems for Asian economies with better economic performance and Oceania economies. This will also force these economies to tighten monetary policy over the next one or two years.

In recent weeks, China, India, Australia and other countries have announced higher interest rates to keep inflation down.

Brazil and Thailand authorities levy taxes on capital inflows to prevent asset bubbles.

The Japanese authorities intervened in the foreign exchange market to prevent the Japanese yen from appreciating against the US dollar.

"At present, the global speculative capital still favours the economies of Asia and Oceania. Massive capital inflows not only bring about the appreciation of the local currency, but also bring the rise of local asset prices and even asset bubbles.

For the monetary authorities of these economies, a reasonable and orderly monetary policy tightening and effective financial regulation will be a compulsory course for some time. "

ANZ Bank China research report points out.

Take China as an example, "the second round of quantitative easing monetary policy in the US is contradictory to the current monetary policy of China returning to normal."

Chen Fengying, director of the Institute of world economics of the China Institute of modern international relations, said that the policy would offset China's interest rate increase effect, leading to the failure of China's macroeconomic policy to give full play to its expected results.

Some analysts suggest that China should build up a number of defense lines and strengthen capital controls in the face of the risk of large capital inflows.

But Shen Minggao said capital controls are only an expedient measure for China in the long run.

"China's policy next year will be tighter and tighter. The Chinese government needs to find a balance between economic growth and inflation."

He pointed out that the Fed's quantitative easing has changed the expectations of the global market, and China's chances of raising interest rates again in the first half of next year are very likely.