Booms, Busts, and Recoveries Message Board

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Strategies & Market Trends : Booms, Busts, and Recoveries

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To: RealMuLan who wrote (55847)	11/11/2004 5:11:05 AM
From: Golconda	Read Replies (2) of 74559

Yiwu, the exchange rate comes into it as future expectations as to the direction of the US dollar will affect treasury holders willingness to buy/hold/sell treasuries thereby affecting the market price. the US$ 515 billion does include all US debt obligations long term or short term. The vast majority of reserves are held in US$ and the majority of this is held in the form of short term debt ie T-bills. The 'problem' china would have just exchanging the debt for $$ would be the movement in prices that this would cause ie the price drop sharply spiking up short term interest rates leading initially to an inverted yield curve. whether this would lead to a wholesale run on the dollar is debatable but would certainly be followed by massive intervention in the currency markets by the ECB & Japan. this probably confuses the issue even more, probably

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