Sorry, Henry, didn't mean to dump any horse s^^t on your thread. A couple more comments (from Area 51), if I may.
At some point the question seems to me not whether the US$ collapses vs. the Euro, but at what point the interest payments on the debt will be too large to sustain. Granted Europe may get there first and it may be later rather than sooner, but even in the
"new era" we find ourselves, the debt continues to grow despite a "budget surplus".
You commented: "But the Fed didn't buy any of those dollars"...From the Yahoo article: "...there was talk it (Japan intervention) had caused problems for the US Fed, which has had to absorb funds in the money market after it was flooded by dollars." Wouldn't that suggest the Fed was buying dollars, or is there another interpretation. Would a Japan. institution buying dollars hold them as dollars or in US paper (interest bearing). Also, the monetary base has increased but .1% over the past 3 mos., with M2 and M3 still growing at a healthy clip (>8%). Could this suggest the Fed is sopping up dollars coming home from abroad?
And though it may be a stretch to view the BIS in such a light, what about the Yen carry trade, and the capital flows it has created into US bonds? From the other side, gold carry, it has been estimated that somewhere between 2 to as high as 8000 tons of gold has been leased by central banks. It has been suggested that some of it may have a hard time finding its way back if the price of gold were to rise, having already been sold into the market.
Thanks for your comments. |
