US Federal Reserve Chairman Ben Bernanke on Thursday hit back at critics of the US central bank’s controversial bond-buying program and issued a thinly veiled attack on China’s policy of keeping its currency depressed.
Bernanke, facing a firestorm of protests from within and outside the central bank, said a more vigorous US economy was essential to the global recovery and dismissed charges he was debasing the dollar.
“The best way to continue to deliver the strong economic fundamentals that underpin the value of the dollar, as well as to support the global recovery, is through policies that lead to a resumption of robust growth in a context of price stability in the United States,” Bernanke said in comments prepared for delivery to a conference at the European Central Bank in Frankfurt yesterday.
The Fed’s Nov. 3 decision to buy a further US$600 billion in US government debt generated outrage among many nations who charged the US with seeking to weaken the US dollar to gain an export edge.
German Finance Minister Wolfgang Schaeuble has called the policy “clueless.”
Local critics have also lashed out, arguing the policy could ignite inflation and fuel asset bubbles.
Fed officials circled their wagons this week to defend the program. Two officials added their endorsements on Thursday, another expressed opposition, while a fourth said monetary policy should not play the main role in driving a stronger recovery.
In his remarks, Bernanke said sluggish growth, declines in inflation and an unemployment rate that has hovered near 10 percent for months convinced US policymakers they needed to act.
“On its current economic trajectory, the United States runs the risk of seeing millions of workers unemployed or underemployed for many years,” he said. “As a society, we should find that unacceptable.”
Bernanke said a fiscal program that combined near-term measures to enhance growth and steps to address long-range deficits would be an important complement to Fed policies.
Addressing global criticism of the Fed’s action, Bernanke said much of the recent weakness in the US dollar reflected an unwinding of the increases that were notched as investors fled to the safety of the greenback during the European sovereign debt crisis in the spring.
Many emerging economies have worried that volatile investment inflows sparked by the US dollar’s decline could be destabilizing — either fueling inflation or asset bubbles.
Bernanke said the failure of some emerging market economies with trade surpluses to allow their currencies to appreciate was making the problems those countries face worse.
“Currency undervaluation by surplus countries is inhibiting needed international adjustment and creating spillover effects that would not exist if exchange rates better reflected market fundamentals,” he said, without explicitly pointing to China.
US officials have long argued that an undervalued Chinese yuan gives the Asian export powerhouse an unfair advantage in international markets.
Bernanke broadened the case against China, which keeps the yuan on a tight leash, by saying inflexible currencies are preventing a needed rebalancing of global growth and could end up destabilizing the world economy.
“For large, systemically important countries with persistent current account surpluses, the pursuit of export-led growth cannot ultimately succeed if the implications of that strategy for global growth and stability are not taken into account,” he said.
The Fed’s bond-buying plan — know as quantitative easing (QE) — won a surprise endorsement from a policymaker who had been seen as an internal critic.
“I believe that QE is a move in the right direction,” Minneapolis Federal Reserve Bank president Narayana Kocherlakota told a conference in Chicago.
Cleveland Fed chief Sandra Pianalto also defended the plan as a way to help lift “uncomfortably low” inflation and fend off the risk of a debilitating broad drop in prices.
However, Philadelphia Fed president Charles Plosser said the costs of the program did not outweigh the benefits, while Fed governor Kevin Warsh said the economy faced problems that monetary policy could not solve.
“Monetary policy has an important role to play,” Warsh told business leaders in Chicago. “But it is not a predominant role.”
Instead, he said, businesses need more certainty in terms of fiscal, trade and regulatory policies.
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],”
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
Thousands of parents in Singapore are furious after a Cordlife Group Ltd (康盛人生集團), a major operator of cord blood banks in Asia, irreparably damaged their children’s samples through improper handling, with some now pursuing legal action. The ongoing case, one of the worst to hit the largely untested industry, has renewed concerns over companies marketing themselves to anxious parents with mostly unproven assurances. This has implications across the region, given Cordlife’s operations in Hong Kong, Macau, Indonesia, the Philippines and India. The parents paid for years to have their infants’ cord blood stored, with the understanding that the stem cells they contained