China alarmed by US money printing.

China holds huge reserves of US treasury debt and is worried that the increasing U.S. debt will cause inflation eventually and thus reduce the value of their US dollar holdings. As a result they are considering buying more gold--note the recent price increase in gold--and also diversifying their currency holdings. I like the quote from Benjamin FranklinBenjamin Franklin at the end.

He who goes borrowing, goes sorrowing! The article is in the Telegraph.

""
The US Federal Reserve's policy of printing money to buy Treasury debt threatens to set off a serious decline of the dollar and compel China to redesign its foreign reserve policy, according to a top member of the Communist hierarchy. ""

Working for the Yankee dollar: Beijing is said to be dismayed by the Fed's recourse to 'credit easing' "We hope there will be a change in monetary policy as soon as they have positive growth again," he said at the Ambrosetti Workshop, a policy gathering on Lake Como.

Analysis: China's 'Beijing Put' on the gold price "If they keep printing money to buy bonds it will lead to inflation, and after a year or two the dollar will fall hard. Most of our foreign reserves are in US bonds and this is very difficult to change, so we will diversify incremental reserves into euros, yen, and other currencies," he said.

China's reserves are more than - $2 trillion, the world's largest.

"Gold is definitely an alternative, but when we buy, the price goes up. We have to do it carefully so as not to stimulate the markets," he added.

The comments suggest that China has become the driving force in the gold market and can be counted on to
buy whenever there is a price dip, putting a floor under any correction.

Mr Cheng said China had lost 20m jobs as a result of the crisis and advised the West not to over-estimate the role that his country can play in global recovery.

Mr Cheng said the root cause of global imbalances is spending patterns in US (and UK) and China.

"The US spends tomorrow's money today," he said. "We Chinese spend today's money tomorrow. That's why we have this financial crisis."

"He who goes borrowing, goes sorrowing," said Mr Cheng.

It was a quote from US founding father Benjamin Franklin. """"