The Fed's purchases of US government securities had "kept inflation from falling even further", he said.

BBC: US Fed's Ben Bernanke hails benefits of stimulus

But while many major international banks have seen large writedowns in the wake of rising defaults among the sub-prime mortgage market, the majority of China's US mortgage-backed securities were underwritten by US government agencies such as Fannie Mae.

BBC: RELATED BBC SITES

During 2000, Mr Greenspan invested in safe US government bonds, or Treasury securities as they are called.

BBC: Greenspan plays it safe

So they print money to tell themselves and us a lie, just as easy Fed policy and massive purchases of Treasury securities tell the government the lie that it is creditworthy.

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These are unique government securities not available to the general public and are backed by the full faith and credit of the US Government.

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