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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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To: mishedlo who wrote (34037)7/22/2005 1:36:04 PM
From: regli  Read Replies (1) of 116555
 
Long term I view the Chinese repeg as the most significant event not the 2% revaluation against the dollar. I believe that this will be on of the key milestones marking the end of the dollar as a reserve currency.

However, in the ST though, we might very well see the dollar appreciate further as more and more money flows into China in the hopes of further appreciation forcing China into even more dollar acquisitions. This would depress bond even further quite in contrast to what many expect.

Billmon lays out the arguments rather well, I think.

billmon.org

In the MT to LT however, this might very well put in the groundwork for a dollar crash as the Chinese as well as most other Asians will be forced to abandon the dollar support in the second coming of the Asian financial crisis but worse.
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