In an unprecedented move, the U.S. Treasury Department has allowed the People's Bank of China to buy US treasuries directly without going through primary dealers which are the Wall Street banks. This relationship has never been accorded to any Central Bank before. See below, Reuters report on this news.
Is this a sign of appeasement on the part of the U.S. to its largest creditor?
On May 9, the Department of Justice reviewed and allowed the Federal Reserve Bank's approval of Industrial & Commercial Bank of China Ltd. (ICBC) to buy a U.S. lender. This is the biggest opening of the American banking market to Chinese companies.
On this same day, the Federal Reserve Board, allowed ICBC, Bank of China Ltd. and Agricultural Bank of China Ltd. to open U.S. branches. See the FRB press releases on May 9, 2012: http://www.federalreserve.gov/newsevents/press/all/2012all.htm
Altogether, these actions coming days after high level talks with Treasury Secretary Geithner and Secretary of State, Clinton, in China is a sign, the US is giving concessions to its biggest debt holder.
With Euro problems persisting and hints that Central Banks will coordinate easing of monetary policies (printing more fiat money), it won't be long before inflationary pressures will rear its ugly head. In the US, printing more money will only lower the value of the dollar. In the long run, what does this means in terms of the dollar versus the yuan?
How will you protect your assets from inflation and further devaluation of the dollar?
Is this a sign of appeasement on the part of the U.S. to its largest creditor?
On May 9, the Department of Justice reviewed and allowed the Federal Reserve Bank's approval of Industrial & Commercial Bank of China Ltd. (ICBC) to buy a U.S. lender. This is the biggest opening of the American banking market to Chinese companies.
On this same day, the Federal Reserve Board, allowed ICBC, Bank of China Ltd. and Agricultural Bank of China Ltd. to open U.S. branches. See the FRB press releases on May 9, 2012: http://www.federalreserve.gov/newsevents/press/all/2012all.htm
Altogether, these actions coming days after high level talks with Treasury Secretary Geithner and Secretary of State, Clinton, in China is a sign, the US is giving concessions to its biggest debt holder.
With Euro problems persisting and hints that Central Banks will coordinate easing of monetary policies (printing more fiat money), it won't be long before inflationary pressures will rear its ugly head. In the US, printing more money will only lower the value of the dollar. In the long run, what does this means in terms of the dollar versus the yuan?
How will you protect your assets from inflation and further devaluation of the dollar?
NEW YORK |
(Reuters) - China can now bypass Wall Street when buying U.S. government debt and go straight to the U.S. Treasury, in what is the Treasury's first-ever direct relationship with a foreign government, according to documents viewed by Reuters.
The relationship means the People's Bank of China buys U.S. debt using a different method than any other central bank in the world.
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