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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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To: RealMuLan who wrote (60775)12/18/2006 10:01:12 PM
From: regli  Read Replies (1) of 116555
 
I think that the Brad Setser article on sterilization is a very important read.

This is just another tidbit:

rgemonitor.com
"... The central bank would be left with a stock pile of government bonds, which it would then likely sell in the ongoing sterilization process; selling government bonds for cash is an option to issuing new central bank debt and selling that debt cash. And the government would be left with a bunch of RMB debt and a bunch of foreign exchange, which it would give to a new investment authority.

The creation of such an investment authority by China – or, for that matter by the Saudis – would likely indicate a desire to diversify. Into equities to be sure. But I would be surprised if the US share of the investment authorities assets would be as high as the dollar share of the PBoC’s – and SAMA’s – reserves. ..."
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