The United States has announced another massive cash injection into its economy in a bid to overcome the recession triggered by the crisis.

This is a short-sighted move that may not only fail to save the US economy in the long term, but even inhibit the recovery of the world's economy.

The US Federal Reserve announced on Mar 18 that it would pump another US$1.15 trillion into the ailing US economy by buying US$300 billion of long-term government bonds and by expanding its purchases of mortgage-related securities by another US$850 billion.

Given the prevailing liquidity panic in the United States, the US government's effort to inject liquidity into the economy by all means is understandable.

However, this effort is likely to be in vain as long as predictions for the US market remain pessimistic.

In this situation, banks and financial institutions in the US tend to take advantage of the liquidity injected by the government to raise their lending interest or the rates of return for corporate loans to make up for possible future losses from insufficient liquidity.

This will give rise to a huge liquidity trap that will render the government's cash injections - however huge - useless.

And this is not the only problem the US government's excessive cash injections would bring.

They will also result in the weakening of US dollars and the lowering of the rates of return of US government bonds within the short term.

US dollars will continue to weaken in the medium- and long-term due to the US' huge financial deficit and trade deficit.

As to the steadiness of the rates of return of US government bonds in the long term, it depends on the effectiveness of the government's market-revival policies and the speed at which the world's economy recovers.

In short, the value of dollar assets will be seriously affected for a fairly long time.

In addition, the weakening of dollars will inevitably add to the pressure on the appreciation of local currencies in emerging markets.

On the one hand, capital in the US market is likely to flow into emerging markets where there are higher returns on investment, causing excessive liquidity and an unreasonably high demand for local currency.

The challenge would be especially evident in countries like China, which are undergoing marketization of exchange rate and capital management.