SKorea plans levy on foreign currency bank debt. This is the headline from todays Yahoo News. It seems that the inflationary effects of QE II could reach around the world. Here are some excerpts from the story:
South Korea plans to impose a levy on non-deposit foreign currency debt held by domestic and foreign banks in a bid to defend itself against capital surges that could threaten the country’s economy, financial authorities said Sunday.
The announcement comes as emerging countries try to control the movement of so-called “hot money” from abroad that they say drives up the value of their currencies and destabilizes their markets. Foreign investors have sought higher returns in fast-growing developing economies amid ultra-low interest rates and other stimulatory monetary policies in advanced countries such as the United States and Japan.
“A surge of capital inflows could lead to inflation and asset price bubbles, and a sudden reversal of such inflows could possibly result in a systemic risk,” said a statement released by the Ministry of Strategy and Finance.
Apparently a number of other countries are taking similar actions to protect themselves from the ill effects that our QE II can bring to their countries. Mean while here in the US all we can do sit back and hope that Congressman Ron Paul can do what needs to be done about our out of control Federal Reserve System.
Americans are already seeing inflation in food prices and in gasoline. Of course our official inflation figures don’t reflect food and gasoline because these thing are considered too volitile. Yet these are exactly the items that most affect the average American. And more inflation in these areas is on the way. Check out what has happened to commodity prices since the Fed announced its intention for QE II. I don’t know what the lag time is between commodity price changes and changes at the grocery store but it is probably on the order of two or three months. So Happy New Year courtesy of the Fed.