America’s plan to cope with its economic woes by printing more money will only lead to more inflationary headaches worldwide and especially in Asia, believes Hong Kong investment adviser Puru Saxena.
According to Saxena, the US economy is currently in a “terrible situation”, but the American administration “have no will to get their house in order – all they know is how to prolong the problem and keep kicking the can down the road.”
The CEO Puru Saxena Wealth Management believes that the US will not be able to print its way out trouble and that the plan will lead nowhere as there are no examples in history of such a policy leading to success.
”When the central bank in America prints money it has a profound effect on economies all over the world, especially the developing economies in Asia. Inflation really picks up in this part of the world because the economies in Asia, generally speaking, are in a lot healthier state than they are in US and Europe,” Saxena said. “And when Mr Bernanke [Chairman of the US Federal Reserve] prints money, that debases the value of the US dollar and makes commodity prices go up. And that causes inflationary headaches in Asia. Everything is interconnected and money printing and stimulus isn’t good for the rest of the world.”
The expert stressed that not only the US, but other countries such as China, Japan and the European states, have no interest in having a strong currency. In this situation, “depending on the rate at which all the governments print money, the paper money are going to continue to diminish in purchasing power versus hard assets, such as precious metals, gold, other commodities and even real estate.”