Federal Reserve Chairman Ben Bernanke on Friday defended the US central bank’s bond-buying against beggar-thy-neighbor criticism, saying the return to a strong US economy was critical for global stability.
He suggested doing so would bolster a US dollar whose weakness has sparked cries of foul from Bogota to Beijing.
The Fed’s decision to buy US$600 billion of government debt has drawn scathing comments from nations that contend it is generating global instability by strengthen their currencies against the dollar, inflating asset bubbles and fueling inflation in their economies.
From Berlin, German Finance Minister Wolfgang Schaeuble -pronounced: “With all due respect, US policy is clueless.”
Bernanke, answering questions from college students in Florida, stressed that Fed policies aimed at giving a boost to the weak US recovery would pay dividends around the world.
CRITICAL ECONOMY
“I think it’s important to emphasize ... that a strong US economy, a recovering economy, is critical, not just for Americans, but it’s also critical for the global recovery,” Bernanke said.
The Fed’s easy monetary policy, made even looser on Wednesday with the new bond-buying plan, has rankled emerging market economies and others, and it looks set to be a bone of contention at a G20 nations summit in Seoul next week.
South African Finance Minister Pravin Gordhan said Fed policy “undermines the spirit of multilateral cooperation” that the G20 had sought to achieve.
The money will find its way into financial markets of emerging nations with potentially devastating impact on their exports, he charged.
Bernanke said US policymakers were fully aware of the US dollar’s importance in the global economy as a reserve currency. The US dollar has weakened sharply and did so again after this week’s decision on a new round of so-called quantitative easing.
“The best fundamentals for the dollar will come when the economy is growing strongly,” Bernanke said. “That’s where the fundamentals come from.”
He told the students that while commodity prices have risen sharply, they were the exception amid generally muted prices for other products and should not cause a serious problem.
AMPLE SLACK
Bernanke said there was ample slack in the US economy that will prevent producers from being able to fully price costlier commodities into finished products that consumers buy.
“Globally traded commodities like energy, food ... have been going up pretty sharply,” he said. “Where there’s a lot of slack in the economy ... it’s very, very difficult ... for producers to push through those costs to the final consumer.”
He added that once inflation pressures become visible, the US central bank will be ready to modify its current stance of accommodative monetary policy to block inflation.
Official interest rates have been near zero for nearly two years.
“It’s going to take some further growth and some further reduction in slack before we begin to see any kind of inflation pressure,” he said.
Not all Fed officials share Bernanke’s confidence that inflation can be held in check. Kansas City Federal Reserve Bank President Thomas Hoenig renewed his call for higher interest rates on Friday, saying in a speech to real estate agents that the new bond-sales program risks igniting inflation and another boom and bust cycle.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day