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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: Haim R. Branisteanu who wrote (38814)	9/24/2003 10:51:10 PM
From: elmatador	Respond to of 74559

Euro economies have as hard a time adjusting to a higher Euro and the US and Japan to a higher USD and Y. Hence the push-pull going on. To try to end matter, between these three currencies mentioned, USD tried to push the Chinese currency up and had last weekend's meeting. The USD can't be devalued by way of printing more of it, When you flood the market with a product, its prices drop. The USD can't be devalued this way, because the extra liquidity has no takers, the FED can auction more USD, but the banks don't take them because there is no one out there worth the risk of lending that money to. The other way should be the Asian overloaded with USD, to flood the market with their dollar hoarding. That's the same as changing the denomination of their reserves from USD to Euro or Yen, which would, in its turn, appreciate against the USD. Elmat's solution: The reserve hoarders change the denomination of their reserves diversifying into gold. In that case the gold price goes up, but wouldn't skyrocket because central bankers will start selling gold to lower their deficits. The USD from reserve hoarders, Taiwan, China et al, ends up in the end up into the coffers of the central banks. The reserve hoarders, would be comfortable with their gold reserves, since the market cannot be flooded and deflate its value.