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Politics : The Obama - Clinton Disaster
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To: DuckTapeSunroof who wrote (8434)3/5/2009 4:32:29 PM
From: Wayners1 Recommendation  Read Replies (1) of 103300
 
That's a really great explanation. If the Chinese held the dollars in their Central Bank, they wouldn't even earn interest, they would just be held to use as a way to influence the value of the dollar in the open market.

If they exchanged the dollars in the open market for other curriencies, other assets, other commodities, it would hurt the value of the dollar and the dollar would be worth less and would buy less from them and the U.S. would in fact buy less from China. But unless they buy bonds straight from the Federal Reserve in exchange for Govt bonds, and the Federal Reserve retired those dollars, those dollars still hit the open market and hurt the value of the dollar right?
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