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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: benwood who wrote (64625)6/26/2006 9:54:40 PM
From: Larry S.  Read Replies (3) of 110194
 
Benwood,

Thank you very much for your response and attempt to help me understand. But:

I understand the first paraparph very well and that many of these dollars are used to buy assets other than treauries, e.g. China's purchase of oil interests in Canada.

I also understand your second paragraph up to the "So in effect ----. Isn't it their purchase of our treasuries that is subsidizing our overspending, not our current account deficit? I also understand your third paragraph particularly their need to keep us spending and buying their goods. BUT, how long are they going hold up our dollar, knowing that it will eventually drop in value? Already, CBs are reducing their dollar reserves. Clearly, they will hold it up as long as it is their interest to hold it up but that isn't forever. But that is just my opinion.

Larry
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