"Over the last few months I’ve noted repeatedly that THE key issue for the financial markets is the ongoing tension building between the Fed’s pro-inflation policy and China’s anti-inflation policy.
That tension just kicked it up a notch.
Over the weekend China hiked interest rates 0.25%. This was the second interest rate hike in three months (the first was on October 19, 2010). And it sends a clear message that China is taking action to cool its monetary system after consumer prices rose 5.1% in November.
China’s not the only one. Both Russia and Brazil have recently entered into the “anti-inflation fray” as the below stories attest...
...In plain terms, our esteemed Fed Chairman Ben Bernanke is about to find his policies running face first into a BRIC wall. He’s been exporting inflation abroad to the emerging markets all the while claiming it doesn’t exist. With growing civil unrest due to soaring food and energy prices the emerging markets are now fighting back.
On that note, China and Russia have already cut their US Treasury holdings by 3% and 9% respectively year over year.
These may not seem like a HUGE drop, but when you consider that both countries are aggressively loading up on Gold and other natural resources at the same time, and we may be at the beginning of a potential seismic shift away from US debt for foreign central banks..."
at http://www.marketoracle.co.uk/Article25328.html
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