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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Chispas who wrote (24517)	2/27/2005 8:20:37 PM
From: Elroy Jetson	Read Replies (1) \| Respond to of 116555

I have a serious problem understanding part of the article you referenced . . . "The Decoy of the Falling Dollar" by Antal E. Fekete. gold-eagle.com Specifically, where he states, *"Only a dramatic rise in interest rates may save the dollar as the world's reserve currency."* § It seems obvious to me that higher U.S. interest rates would make the Yen carry-trade more profitable, not less. The Japanese are printing yens, not to support productive enterprise but to finance speculation. Next, the ball is in the Fed's court. The Fed obliges and prints dollars, again not to support productive enterprise but to serve as a drop-off point for speculators. Japanese interest rates being so low, speculators can borrow yens at around 1.5%, sell them for dollars to be invested in US Treasuries yielding 4 to 5%. The speculators pocket the difference without performing any useful service whatsoever. .