The Obama - Clinton Disaster Message Board

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Politics : The Obama - Clinton Disaster

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To: JakeStraw who wrote (17227)	8/12/2009 2:53:31 PM
From: DuckTapeSunroof	Read Replies (1) of 103300

Re: "How long do you think foreign countries...." Which countries? (Though... if we are talking about just the top two or three foreign buyers of US sovereign debt... the answer is probably "for quite a very long time to come!") Debt is often purchased not so much as any 'investment' but rather because it must be purchased anytime a country has to defend their home currency's peg to the US Dollar... while at the same time is constantly rolling in US Dollars because the US is their main export market (China). The buy Treasuries to 'mop up' the hundreds of Billions in Dollars that they take in in trade each year. This is called "currency sterilization". Without that there would be enormous pressure placed on their own currency to rise in value vis-a-vie the US Dollar.. and the speculators (like Soros, et al) would eat them alive and they would be forced to abandon their currency peg and let the value of their currency RISE to a market level.

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