The US Fed's move into Treasuries

The the US Federal Reserve is to start buying US Government debt.

[

](https://dealbook.blogs.nytimes.com/2010/08/11/10-year-treasury-yields-slide-on-feds-decision/)

Got me thinking about an earlier comment from the largest holder of the paper

[

](https://online.wsj.com/article/NA_WSJ_PUB:SB123692233477317069.html)

[

](https://news.malaysia.msn.com/business/article.aspx?cp-documentid=4151671)

The Fed and Government in the US certainly don’t need the main buyers of their debt becoming reluctant to buy more, or worse, offloading some of what they already own.

Blue Horseshoe

China needs to cop on…

They moan about the risk in their Treasury’s. If they are so worried they can just sell them, dump their dollars and let the Renimbi rocket higher. The 800bln Tsys they own would be easily absorbed, in fact the Fed basically just said they are ready to take 250bln extra just on last nights statement and the rest is a blip on the radar in the context of the speed the US is increasing its savings rate.

Obviously they know that their economy would collapse on the back of this and they would be the biggest loser, so they continue to buy them, complaining about every purchase. They hit a nerve in the US with their exchange rate games and have been told to move on, so they move a bit more into the Yen, moving pain to Japan.
They complain alot about the risks in other nations economies, yet the big worry is really that they have an economy that is conditioned on maintaining a cheap currency to keep the status quo.

IF china allowed its currency to rise in value, it would boost domestic demand. The Chinese would be able to afford to buy the products they make.

ftalphaville.ft.com/blog/2010/08 … ndits-say/