Liu Wei, a director with China's State Administration of Foreign Exchange, the foreign exchange reserve manager responsible for administering $2.6 trillion in FX reserves, told Caing.com today that "Quantitative easing carried out by the U.S. Federal Reserve could exacerbate global currency interventions, hurt the developed countries and fuel flows of speculative capital into emerging market economies." Additionally, and contrary to all those who believe that commodity prices have in some cases tripled over the past year based purely on goodwill and not excess money, Wei also said that the Fed's quantitative easing program may have some stimulus impact on the U.S. in the short term, but also that it could add to global inflation pressure and fuel asset bubbles "so that the global economic recovery and growth face greater uncertainty." Pretty much as we have been claiming all along.
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