The Fed's two printing presses are hard to retreat from the commodity boom

In the 1963, American meteorological scholar Edward Lorenz analyzed a kind of chaos effect in meteorology. He uses computers to solve a number of equations that simulate the Earth's atmosphere, hoping to improve the accuracy of long-term weather forecasts with high-speed computing. In one experiment, he took an intermediate solution of the equation 0.506 out and raised the accuracy to 0.506127 before sending it back. When he went to the café to drink a cup of coffee back to see when he was surprised, the original small difference, the result is deviated from 108,000. Later, he summed up the effect that a seagull flapping its wings was enough to change the weather forever.　　This effect later has one of the most common figurative metaphors: a butterfly flapping its wings in Brazil can cause a tornado to Texas one months later. November 3, 2010, the Federal Reserve, after a two-day interest rate meeting, announced that it would start a second round of quantitative easing to buy $600 billion trillion in U.S. Treasuries over the next 8 months, while maintaining benchmark interest rates, to try to improve jobs and boost growth. The two-time "banknote printing" effect of the Federal Reserve was quickly passed on to global markets, including China. November 4, the Shanghai Composite Index rose 1.85%, the Shanghai and Shenzhen 300 indexes rose 1.76%, the Shanghai Commodity Index rose 2.73%, gold, non-ferrous metals, coal and other anti-inflation plate led the market.　　Perhaps it is the American butterfly that is fanning China's commodity stocks. So where is the logical starting point of this chaos? In the medium to long term, will this mechanism continue to exist? This may be a problem that domestic investors are thinking about. This article will examine the problem from three aspects: The U.S. economy needs easy monetary policy through recession now the U.S. economy is experiencing the aftermath of the 2008 financial crisis, the pace of economic recovery is still slow. There is so much spare capacity in the economy: there are more than 14 million vacant homes in the housing market, and 28% of production is unused. Consumer spending, while gradually increasing, continues to be constrained by stubbornly high unemployment. The unemployment rate is as high as 9.6%, with about 14.8 million people looking for jobs but unable to find jobs that month.　　The unemployment rate figures are the second in American history, the first in 1982-1983, when inflation in the US was as high as 7.7%. Personal consumption spending in the U.S. economy continues to grow, but remains weak. On the one hand, the U.S. job market continues to slump, consumers are worried about unemployment or lower income to choose prudent consumption.　　On the other hand, the process of household deleveraging continues, and consumers are spending more on debt repayment or saving, and consumption tends to fall. At the same time of weak domestic demand, the external demand for economic growth of the pulling effect also showed a weakening trend.　　U.S. exports grew only 9.1% in the second quarter, the lowest quarterly increase since 2009. Tellis, a senior scholar at the Carnegie Endowment for International Peace, says the U.S. economy will continue to dominate in the short term, but after 7-15 years of growing Asian economic experience, the United States will meetImminent challenge. Tellis that if the United States is to solve these problems for a long time, a fundamental shift is needed to keep the dollar down and reduce consumption.　　We do not know whether the status of the U.S. economy will inadvertently be shaken by other countries in 15 years, but it is clear that the U.S. government is moving in the direction of a weakening dollar. The strong dollar cannot contend with a longer-term trend to try to stimulate growth and improve employment through loose monetary policy, which is the original intention of the Federal Reserve's decision to buy 600 billion of dollars in government bonds on November 3, 2010. The move could face a short-term challenge in the US, which is to maintain a strong dollar to export dollars to the world and sell its bonds.　　It is clear that this is a short-term consideration, because global investors are obsessed with the super credit of US Treasuries, and once the market is in trouble, investors are still willing to buy US Treasuries.　　In addition, the huge financial market in the United States, providing global investors with investment opportunities, to invest in U.S. financial markets, of course, need the United States dollar, not to mention, crude oil, agricultural products, gold, iron ore and other commodities are denominated in the U.S. dollar, the global dollar demand has a lot of inertia and rigidity Bernanke's monetary complex if the Fed flaps its first beautiful butterfly wings in 2008, and the second in November 2010, then the Fed will not be able to fan the beautiful butterfly wings again, it is the thinking that all investors face.　　To this end, we do not have to review the next Bernanke monetary complex. In his PhD at MIT, Bernanke was most interested in two things: the Great Depression of the the 1930s and the Boston Red Sox baseball team.　　Mr Bernanke's keen interest in the Great Depression has led him to contemplate and study the causes of the Great Depression and to begin to focus on the threat to the economy of deflation for a long time.　　Bernanke has a nickname for "The Book of the printed newspaper," which originated from his disagreement with Alan Greenspan over inflation, and the public gave Bernanke the nickname based on his view that, if necessary, it could increase liquidity by printing money in large quantities. In 2002-2003, Mr Bernanke had gained a lot of visibility in the industry in tackling the deflationary problems of the United States, and he advocated a rate cut, which led to a drop in the federal funds rate to 1% per cent.　　The 2008 and the recent history of November 3, 2010 once again show that Bernanke has a very strong monetary sentiment. Milton Friedman has been hailed as the most influential economic book of the 20th Century, "The history of the American currency," followed by a reduced version of the Great Recession 1929-1933. Bernanke, who is also chairman of the Federal Reserve, wrote the preface to Mr Bernanke: "In the Great Recession, your views are correct, we ask our hearts to be ashamed, thank you for your corrections, we will not make mistakes again". Mr Bernanke's correct view is that "no matter how monetary expansion is achieved, it is simply to stop or slow the currencyThe decline in stock, the consequences of the Great Recession will not be so serious. "It is clear that Mr Bernanke is expanding money on a massive scale, and that money is trouble as long as the economy and jobs require it." (National Joint Security Fund Company product Development Department)