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Politics : Dutch Central Bank Sale Announcement Imminent? -- Ignore unavailable to you. Want to Upgrade?

To: sea_urchin who wrote (18512)	6/5/2003 2:59:39 PM
From: Ahda	Read Replies (1) \| Respond to of 82361

No. The debt is denominated in USD, being US Treasuries, bonds, stocks etc. So, if the USD falls against say the Euro, then the Euro can buy more, not, less US debt. Works both ways. I suppose you could say you could buy more debt but who wants it if an economy starts to fail. As you have already bought the debt at a far greater cost the original transaction is a loss to you. The other minus is who needs it when it can be bought at a less costly rate if the US dollar continues to fall. You are very right about China unless the dollar falls to far which is highly unlikely as this would then become labor rate and cost problems. China can hurt then too. China right now is a win win situation but can only remain so if her economy grows internally. Price pressure placed upon the rest of the world is what the key is. Her projected export growth figures due to world employment are loose figures she has to be careful of product glut and subsequent deflation. She sort of has to protect self and keep self solid with internal growth. No one can compete with her on labor costs now. Our unemployment figures are bound by a time limit so you could very well see a decrease in the figures but an increase in the downward spiral of a nation. Please add too.

To: sea_urchin who wrote (18512)	6/5/2003 3:24:46 PM
From: philv	Read Replies (1) \| Respond to of 82361

Searle, your economic model of dollars and debt ascribes no penalty or consequences to the accumulating debt. The dropping value of the dollar is an immediate loss of investment for the foreign holders of US debt (securities). Why would they be happy about that, and why would they buy more just to see their investment drop again? That is the reason why the high pockets try to talk up the dollar, although their policies are contradictory. The US dollar is the world's reserve currency, and as such must remain "sound". World economic system depends on this or else the system spirals down to collapse, or abandons the dollar in favour of some other medium of exchange. In addition, a declining currency is a declining standard of living as prices must eventually rise. I have personal knowledge of such, having seen the Canadian dollar fall from above parity with the US dollar to 60 cents.