Monetary News Jan. 17 - 21

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News
THURSDAY
Hu's Visit: Can Timothy Geithner Prevent a U.S.-China Trade War?
Is a trade war possible? Geithner was asked. "A very low probability," he replied, "and I think it's completely avoidable."
Yuan: Under or overvalued?
The yuan could be undervalued by as much as 35%. Or it actually could be overvalued. Critics have long accused China of keeping its currency artificially low, making its exports cheaper and more competitive against foreign competitors.

TUESDAY
The Latest American Export: Inflation
In 2010, prices rose by more than 5% in major emerging markets such as China, Brazil and Indonesia.
Fed Officials Indicate Growth Pickup Won't Alter Bond Purchases
Federal Reserve policy makers, who see unemployment falling too slowly for their liking, are giving no indication that signs of an accelerating recovery will dissuade them from carrying out record monetary-stimulus plans.
AIG repays the Fed
Let no one say the government and AIG are dragging their feet on the road to their eventual separation.
Schumer, Democrats time new currency war for Hu's White House visit
Schumer and two other Democrats announced Monday they will introduce legislation hitting China for currency manipulation just as Chinese President Hu Jintao is set to arrive in the United States for a critical summit with President Obama.

Economist Comments
FRIDAY
Inflation Is Coming to US and Beyond
If you see and feel inflation, know that you're not alone. But also know that it's only the first wave and the inflation pumps are being primed.

THURSDAY
The Mounting Inflation Pressure in New Zealand
The market's expectation for another immediate raise in the official interest rate in the next few weeks is set to grow.

WEDNESDAY
Euro's Spanish Battle Needs Some Shock and Awe: Eric Chaney
The major battle in the fight for the survival of the euro will be fought on Spanish soil. Greece, Ireland and soon Portugal should be regarded as skirmishes. But Spain is different, in terms of scale and solvency.
Fed Tune-Up Would Silence Calls to Trash It: Terrence Keeley
The 112th Congress is shaping up to be quite prickly for the Federal Reserve, and for good reason. The time has come to amend, but not end, the Fed.
Taylor Rule II Shows Which Fed Moves Work Best: Amity Shlaes
the reason Hu Jintao decided to visit the U.S. this month is that the Chinese leader wants to know when the U.S. economy and its currency will be stable and strong again. It’s good the Chinese are known for patience because Hu may have to wait a while.
There's No Doubt the Fed Is Creating Inflation
Incessant money printing is discouraging the use of labor by making capital cheaper and technology more efficient.

TUESDAY
Portuguese Bailout Will Make Euro Crisis Worse: Matthew Lynn
New year, new crisis. No sooner had Europe’s bond traders, politicians and central bankers gotten back to their desks than it was time to begin tussling over the fate of a small economy on the periphery of Europe.
10 ways to play the spike in global inflation
Inflation is on the rise in many parts of the world, but there are ways to profit from it through key trades in commodities, currencies and global equities.
The Fed's Third Mandate, the Threat of the Irish, and China's "Miracle" Business Cycle
In 2011, world GDP growth will likely be much better. Here, a look at the downside risks in Europe and China to this prediction.
QE2 and the Commodities That Cause Riots
Commodity markets reacted so strongly to QE2 because a number of global weather problems reduced harvest forecasts and, with global food stockpiles already tight, grain prices had a running start before QE2 even started.
Sources of Pressure on US Interest Rates
Rising interest rates are bad news for bondholders, especially those who hold longer term maturities, and will only make economic growth more difficult to achieve.

Blogs
FRIDAY
A Terminological Suggestion
People who have studied monetary economics seriously understand it, as should anyone who was an economics major.  Simply put, it means that people's demand to hold real money balances at the current price level is in excess of the supply of such balances.  Hence, an excess demand for money.

THURSDAY
"QE1" and Monetary Disequilibrium
Before people shoot their mouths off, it would behoove them to know what they are talking about.  In this case, it would be helpful to know exactly what QE1 was and what I've actually said about what the Fed should and should not have done.

WEDNESDAY
The Fed Has No Clothes
Plosser enumerates impossible goals of monetary policy.
Appreciating China’s Currency
China’s President Hu Jintau arrives in Washington today for a state visit, turning the spotlight once again on U.S.-China trade and China’s allegedly undervalued currency, the yuan. Not one to let such an opportunity go to waste, Sen. Charles Schumer (D-N.Y.) is introducing legislation that would threaten to impose duties on imports from China if the yuan does not appreciate quickly.

Reports
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