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Strategies & Market Trends : Booms, Busts, and Recoveries
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To: Seeker of Truth who wrote (50034)5/15/2004 5:37:28 AM
From: EL KABONG!!!  Read Replies (1) of 74559
 
Hello Malcolm,

Look at it from the perspective of various Asian economies.

If they stop buying the dollars, regardless of whatever interest rate is paid, then it's Asian crisis all over again, this time including China. Directly (for example the China-to-WalMart relationship) or indirectly (Japan-to-China-to-WalMart), the end buyer for most Asian goods is the USA. Canada, Mexico, Latin America and western Europe combined don't have near the trading relationships with Asians that the USA enjoys.

So, to keep their economies humming along, the various Asian governments accept "worthless" US dollars, and whatever interest rate they can get is a bonus. For the Japanese, 1% to 2% interest rates are positively stratospheric compared to the .000002% rate they were getting on the Japanese long bond.

KJC
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