Monday, November 16, 2009

It's Come to This

Chinese communist chief banking regulator, Liu Mingkang, warned that U.S. monetary policy was inflating asset bubbles around the world. You think? It's pretty bad when the U.S. is getting lectured by the communists on how to run capitalist monetary and fiscal policy. Even worse, Liu is correct. From the WSJ:

Liu Mingkang, chairman of the China Banking Regulatory Commission, said that a weak U.S. dollar and low U.S. interest rates had led to "massive speculation" that was inflating asset bubbles around the world. It has created "unavoidable risks for the recovery of the global economy, especially emerging economies," Mr. Liu said. The situation is "seriously impacting global asset prices and encouraging speculation in stock and property markets."
Meanwhile the jobless rate is at 10.2%, supposedly psychologically significant, but no matter, there are a lot of unemployed and underemployed people out there. But shouldn't things be looking up? After all the stock market is up. Maybe things aren't so rosy, to recycle a quote:
"A jobless recovery is nothing more than a euphemism for a monetary asset bubble..." Jesse of Jesse's Café Américain. H/T W.C. Varone's blog.
The real conundrum for U.S. policy is the need to get the ballooning deficit under control. This will require spending cuts, which Obama and the Dems are in no mood for. So look for the return of stagflation and hopefully another one term Democrat President.

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