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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: orkrious who wrote (25827)2/3/2005 4:45:49 PM
From: ild   of 110194
 
Date: Thu Feb 03 2005 16:33
trotsky (art) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
one more comment:

"He also said EU couldn't become a reserve due to thier limited growth"

whether a currency is useful as a reserve currency has very little to do with reported 'economic growth'. e.g. the US GDP reports are basically fake...hedonic indexing is the major source of the reported 'growth'. anyway, the only questions that are important w.r.t. reserve currency status are 1. a conservative central bank ( the ECB's qualifications in this regard are clearly superior to the Fed's ) 2. depth of capital markets in the currency concerned ( Euro area catching up real fast ) and 3. the perceived political stability and security of the issuer ( EU clearly qualifies, even though its military clout doesn't equal that of the US ) and 4. fiscal policies of the issuer ( as long as the Maastricht treaty is in effect, EU's qualifications are superior ) and 5. it helps when you're a creditor to the rest of the world instead of a debtor ( no comment necessary on this point ) .
could be i've left something out, but anyway, 'economic growth' is definitely not an issue in this context.
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