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Politics : Dutch Central Bank Sale Announcement Imminent?
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To: sea_urchin who wrote (22253)1/8/2005 12:10:00 PM
From: philv  Read Replies (1) of 80915
 
Hi Searle: The turnaround in the POG is an apt term. Quite a change in a short period of time. Is it consistent with the dollar's advance?

Funny how in a couple of weeks the landscape changes. Or is it because of the narrow focus, but the big picture remains unchanged?

You know where I am going. Fundamentally nothing has changed. And more of the same is promised. Here is a revealing article from the Bank of Japan. bloomberg.com

``We have a very firm commitment to the market and to the general public' to maintain the policy of expanding Japan's money supply, Fukui said in a speech to the Japan Society in New York. ``Until the core CPI index comes up above zero percent in a stable manner, we'll keep this monetary stance.'

In other words, they will continue their policy of borrowing, printing YEN and buying US treasuries.

As for the US, we will have to wait and see if they are willing to scale back their spending and borrowing. Bush has been much more willing to limit future liabilities and spending on social security than the immediate military for example. But does this have any real impact as the economic benefits of privatizing pensions are so far in the future?

So it looks like not much has really changed. The strengthening of the US dollar will diminish calls for the ECB to increase liquidity (lower the interest rates), for China to re-value their currency, and assures a continuation of the present trade deficit. It is hard to imagine that this is the intended result of a strong dollar, but it is.

Meantime, Japan has reassured the US and the world it will continue the game forever if necessary.

But who knows how the picture will look tomorrow.
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