To: SliderOnTheBlack who wrote (23305 ) 4/2/2005 8:46:19 PM From: Roebear Respond to Slider, Answers, there are some in this somewhere, follow the following link and the article is about half way down.prudentbear.com ...But clearly, financial players around the world are now saying, “I will trade some of my dollar balances for crude because I need the crude.” The Chinese are clearly going to buy oil and any commodity they can trade their dollar balances for, without causing too big of a crisis. Why wouldn’t they? These are smart people. They don’t need the dollar balances. They buy them because someone has to buy them. At any opportunity to trade them for copper or zinc or anything, they will trade. Everyone wants to act as if the global environment never changes. The reality is that it has changed profoundly, in just a few years. What I am contending today is that the period of “disinflation” has ended—ironically, just when some have been trumpeting that the Fed has won the battle against inflation. We have very highly liquid competitors now. And we are bidding against them for whatever we want or need. Meanwhile, the foreign credit systems that used to be highly constrained by the strong dollar—by the fear that if they did anything risky, speculative financial flows would desert them for the safety of the U.S.—have been utterly unleashed. Now, it’s like everyone has a checkbook backed with U.S. dollars and can do whatever they want.
