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Politics : Foreign Affairs Discussion Group
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To: Sun Tzu who wrote (169301)8/18/2005 3:15:13 PM
From: neolib  Read Replies (1) of 281500
 
Regardless, the point is that why would any nation keep large amounts of USD at hand when such action puts their fortune at the whim of the Federal Reserve?

But the reason is obvious! We are willing to buy their products, so they are extending credit on the assumption we are an OK risk. It's the same reason Ford & GM hand out zero interest auto loans, or declare the average American can get the employee discount. They have to sell. For most of Asia, as well as many of the oil producing regions of the world, its sell to the USA or suffer very prompt economic problems at home. So extending credit is all they can do. After us the deluge so to speak. The US can run that race longer than any other country, so it is easier to keep ones blinder on with the stable ole USA soaking up the product and handing out IOU slips. God help us when real estate cracks as near as I can tell.
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