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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: mishedlo who wrote (26397)2/14/2005 5:46:06 AM
From: Wyätt Gwyön  Read Replies (3) of 110194
 
But who are the buyers if they sell?

it's not that simple. the fact that there is a counterparty does not mean there is an invisible force field proppping up the USD at some particular level. if Thailand, e.g., exchanges USD for subways, then that puts marginal price pressure on the real goods. the receiver of the USD (the goods supplier) is less interested in propping up USD than a mercantilist country, and in any case must pay his costs. to the extent those costs are not in USD, the receiver must buy local currencies, putting marginal price pressure on them.

at each stage in circulation, and as more parties come into the transactions, there are other preferences for USD use other than propping up USTs. these preferences put pressure on other currencies and real goods.
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