US President Joe Biden’s US$1.9 trillion American Rescue Plan received final approval from the US Congress on Wednesday
It was signed into legislation on Thursday, but concerns have been raised about its potential to cause further financial market turmoil

US President Joe Biden’s US$1.9 trillion coronavirus rescue plan has raised the alert level in China, with government officials and advisers openly expressing fear that the massive injection of money into the global market could inflate asset bubbles, cause further financial market turmoil and lead to higher inflation.
The American Rescue Plan, which includes US$1,400 direct payments for middle-class Americans, an extension of unemployment benefits, funding for state and local governments hit hard by the coronavirus pandemic as well as money to fund the roll out of vaccines, received final approval from the US Congress on Wednesday.
And Biden signed it into legislation on Thursday, giving a strong boost to the US economy but also raising concerns that growth could overheat and force the US Federal Reserve to raise interest rates sooner than previously expected.
Huang Qifan, former Chongqing mayor and an outspoken government adviser, described the plan as a “fierce flood and savage beast”, warning it posed a huge challenge to the rest of the world, especially China.

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“The United States has released an cumulative US$7 trillion of liquidity through [the issuance of] Treasury securities and unlimited quantitative easing [by the Federal Reserve] to save its economy.

“The newly launched US$1.9 trillion rescue plan will largely be funded with a new round of money printing. It will inevitably result in massive liquidity and inflation,” Huang told a forum in Beijing on Monday.
US critics of the legislation argue that it will pour petrol on an economic recovery already showing signs of burning more brightly, risking a resurgence in inflation.

Most members of Beijing’s policymaking circle side with the critics, and have been on high alert for the possible spillover effects since the plan was unveiled in January.

But US Federal Reserve chairman Jay Powell and US Treasury Secretary Janet Yellen have dismissed the concerns, arguing that it will take years for the US economy and its job market to fully recover from the economic damage caused by the coronavirus.
Chinese Officials are worried that the additional liquidity added to global markets, on top of already abundant funding, could produce asset bubbles that would threaten global financial stability, including in China.
Criticism of the plan has become sharper in recent days given the recent sharp drop in Chinese stock prices and rise in factory gate inflation due to higher raw materials prices.
The high level of US government debt, which stood at US$27.8 trillion at the end of 2020 and a federal government budget deficit estimated at US$3.1 trillion, could endanger the value of the US dollar and cause financial market turmoil, bringing “systemic risks” to the global economy, Huang warned.

The American Rescue Plan includes US$1,400 direct payments for middle-class Americans, an extension of unemployment benefits, funding for state and local governments hit hard by the coronavirus pandemic as well as money to fund the roll out of vaccines. Photo: TNSThe American Rescue Plan includes US$1,400 direct payments for middle-class Americans, an extension of unemployment benefits, funding for state and local governments hit hard by the coronavirus pandemic as well as money to fund the roll out of vaccines. Photo: TNS
The American Rescue Plan includes US$1,400 direct payments for middle-class Americans, an extension of unemployment benefits, funding for state and local governments hit hard by the coronavirus pandemic as well as money to fund the roll out of vaccines. Photo: TNS
US President Joe Biden’s US$1.9 trillion coronavirus rescue plan has raised the alert level in China, with government officials and advisers openly expressing fear that the massive injection of money into the global market could inflate asset bubbles, cause further financial market turmoil and lead to higher inflation.
The American Rescue Plan, which includes US$1,400 direct payments for middle-class Americans, an extension of unemployment benefits, funding for state and local governments hit hard by the coronavirus pandemic as well as money to fund the roll out of vaccines, received final approval from the US Congress on Wednesday.
And Biden signed it into legislation on Thursday, giving a strong boost to the US economy but also raising concerns that growth could overheat and force the US Federal Reserve to raise interest rates sooner than previously expected.
Huang Qifan, former Chongqing mayor and an outspoken government adviser, described the plan as a “fierce flood and savage beast”, warning it posed a huge challenge to the rest of the world, especially China.
The newly launched US$1.9 trillion rescue plan will largely be funded with a new round of money printing. It will inevitably result in massive liquidity and inflation
Huang Qifan
“The United States has released an cumulative US$7 trillion of liquidity through [the issuance of] Treasury securities and unlimited quantitative easing [by the Federal Reserve] to save its economy.