What can the Fed do?

Another inflation risk upwards indicator from the wholesale prices. Yes, we all know the situation is out of control! In Hong Kong, big landlords are increasing rentals by more than 100% and daily necessities sold at supermarkets are rising by 5% every month. Inflation has LONG been out of control; it's just that the official level refuses to acknowledge the problem.

But what can the Fed do? What can we do? Economic slowdown is spreading from the US to Europe, Japan, and even China. To tighten monetary policy by raising interest could only be the last very last resort and to do that may be regarded as suicidal to economic growth. And mind you raising interest rate may not have any effect to curb inflation. So should we do something like our Central Government in Beijing? I mean using administrative actions to curb inflation, to freeze prices and to control supply and demand. I don't have the answer but if that save poor guys like me from becoming poorer everyday, I would vote for it. I don't care about theoretical criticisms against administrative intervention if it is done for the benefits of poor guys.

USA may need to learn something from our Central Government in Beijing (if they have not yet done so). China has overcome all hurdles to the Beijing Olympics: the snow, the price inflation, the great earthquake, the stock market collapse, the ..... and this shows us the right direction. Yes, I see the star of China shining very brightly over the sky.

The only problem that concerns me is speculations in the Chinese economy. We must use all means to end speculations once and for all. I refer in particular to speculations derived from the inflow and outflow of foreign capital. International hedge funds, international carry trades, and international stock speculators, please stay away from our Chinese economy! Our Chinese stock markets may fall but China will continue to rise up!