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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: Archie Meeties who wrote (4582)7/19/2000 3:40:42 PM
From: pater tenebrarum  Read Replies (1) of 436258
 
by and large, yes. note that for this to work, no rats must be seen jumping ship...as the dollar supply overhang held by overseas CB's is enormous.

as you say, the synchronization of the global upswing ensures that inflation is going to heat up regardless. the heady days of forever falling import prices are over. the competition for capital is also heating up...as export led upswings in Europe and Asia slowly shift towards domestic demand led upswings, both the rate bidding war is set to heat up as well as the pressure to artificially keep the dollar high.

btw, if the recent pace of tax reform in Germany ignites similar moves across Europe, the Euro may actually become a viable currency. once that happens, OPEC may be prepared to accept Euro's in lieu of dollars and it will increasingly find its way into reserves at Asian CBs.

so there's lots of potential pressure for the dollar waiting in the wings...not to mention the possibility of the US credit and asset bubble getting kicked in the teeth.

Moto theorized also that the FOMC supports the stock market in order to support the dollar. it's mainly the flows into equities that keep the capital account in good shape after all. if foreign flows into US equities should cease, the dollar will undoubtedly get hit. so they print more money and create more debt to keep the stock market up in order to keep foreigners throwing money at it.

the insiders are of course delighted, as they get one chance after the other to off-load their funny paper.
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