<Japan massively panics and sells US$>
The policy of Japan and China won't be to sell USD, it will instead be to end vendor financing recycling back to the US. They will deemphasis heavy exporting to America for more Clown Bucks. Instead they (especially China and India, and perhaps, even Japan elswehere in pan-Asia or eastern Russia) will seek to employ USD directly in Asia building out domestic electrical systems, bailing out bad banks, putting in major public works systems: sewers, port improvements, resource development, etc, etc.
Ending Asian vendor financing also has the effect of raising US interest rates, which is a defacto defense of the currency, which makes the USD the Asians hold go further. At some point speculators and investors may decide to hold USD paying higher rates (5%, 6%, 7%) rather than piling into assets like gold at 470?, 490?, 510?. There's a cry uncle level in there somewhere.
Message 20784974
streettracksgoldshares.com
At that point we are back into currency as money equilibrium. The trade deficit will then be cured for two reasons: not as much Asian crap to buy, and no easy money to buy it with. |
