The central bank of the United States of America, the Federal Reserve, in response to the recent Great Recession has acted swiftly, decisively and boldly. Its answer to a catastrophe that was caused by irresponsible lending by greedy banks to Ninjas (no income, no job or assets) has been to cut interest rates to the bone and flood the economy with cheap money in the hope it’ll be used to kick start the economy.

So in other words, as I see it, in order to fix a problem caused by cheap money they’ve made money even cheaper. I often do the same thing after a big night in (I don’t go out anymore) and the inevitable skull bursting hangover. My answer, clever bloke that I am, is to crack open a breakfast Black Label to soothe my pain, and of course it works; for a nanosecond. Once that’s over however I sink into a state of physical and mental self loathing that only dabbing my temples with chilled slices of cucumber, pots of green tea, and several gallons of fizzy water can cure.

The Fed feeding would be fine and dandy if only the hungry were benefitting from the feast. Sadly, the fat pigs from the banks have their gluttonous snouts in the trough and small businesses and the like are being denied a much needed square meal.

After the latest announcement from the Fed of a $600 billion quantitative easing package (buying back stuff they themselves sold to the banks), there was a chillingly poignant response from the Chinese.

“As long as the world exercises no restraint in issuing global currencies such as the dollar — and this is not easy — then the occurrence of another crisis is inevitable, as quite a few wise Westerners lament. China must set up a firewall via currency policy and capital controls to cushion itself from external shocks”.

Nothing opaque about that statement I think you’ll agree, and it’s particularly disturbing as it comes on the eve of the G20 meeting in Seoul next week where everyone hopes the Chinese and the Yanks will get all chummy over currencies. America wants the Yuan to be allowed to strengthen and erode the competitiveness of China’s exports: China is resisting. After the criticism just levelled at the Fed by the ever more powerful Chinese, I don’t think Mr. Obama will get his takeaway.

As for the $600 billion, well that’ll be punted by the suits in emerging markets like ours, and our stock market and currency will go up and we’ll all say how well we’re doing as the prices flash across the screens of CNBC and Bloomberg.

Until of course the Black Label effect wears off.

Cheers.

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