Date: Fri Dec 19 2003 10:51
trotsky (ork@'will the BoJ manage to keep the dollar's) ID#377387:
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decline orderly'.
in theory, yes. after all, there is NO LIMIT to the amount of Yen the BoJ can print. as a matter of fact, its printing press has been doing overtime for quite a long period now.
however, there are many reasons to suspect that in the end, they will simply be overwhelmed by the developing crisis. at that point, unexpected things might happen. for instance, there is no immutable law of nature that says that Asia's central banks must continue throwing good money after bad in an attempt to keep their new age mercantilism alive. of course, Japan is a VASSAL of the US treasury, first and foremost, and so far, is probably doing as it's told. but the inescable fact is that the central banks can not con the market forever. Japan's incessant printing of Yen in order to buy depreciating dollars is not an isolated event - it has far-reaching consequences for its economy, and indeed other economies in Asia. when the consequences of these actions finally hit home , there may be a change in political leadership. the new guys may be less pliant - and less inclined to add to the IOU mountain. the huge dollar overhang in Japan's hands is in fact a threat to the dollar longer term - simply because one day, someone will come and want to get rid of it.
it is one of those very thin threads upon which the entire dollar standard/fiat system hangs.
when it snaps, gold would probably trade at stratospheric levels...it's less obvious what stock markets would do. it's possible that they will gain nominally, but not in real terms. historically, stock markets have often risen in response to monetary crises, due to the fact that stocks inter alia represent a claim on productive assets. |
