Though sluggish economic growth and high unemployment are deep concerns for the US economy, perhaps the primary reason for quantitative easing II is the following:
"The U.S.-driven strategy is designed to counter growing protectionism and is a less-controversial way of leveraging China to allow a far faster pace of yuan appreciation, a sensitive issue for Beijing."
Tally, Ian and Venkat, P.R., 2010. Geithner's push opposed by apec. The Wall Street Journal, Nov. 6.
I continue to argue that the pegging of the Chinese Yuan has caused ripples of tension throughout the global currency market. The longer pegging goes on, the greater the tension.
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