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Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: gregor_us who wrote (42288)	4/20/2005 9:23:02 PM
From: Think4Yourself	Read Replies (2) \| Respond to of 206161

That makes sense but I'm not completely convinced. The deficit is a major problem for the US, or so everyone says. Bush is pushing hard for an end to the peg. My understanding is that we pay China for goods we import in dollars. China uses those dollars to buy our debt via T bonds, rather than dumping the dollars on the Forex. They are subsidizing our consumption of their products to keep their people employed. If we cut down on consumption from China due to their products becoming too expensive, or for other reasons (rising interest rates or inflation for example) doesn't the China strategy lose its appeal for them? The benefit to their economy is reduced when our economy slows down. At some point their policy doesn't help them and they have $700 billion in dollar demoninated T Notes that are useless to them. Why would they want to be stuck in that situation? Could they also at some point determine that they want to stimulate internal consumption and the benefit would more than offset losses by selling dollars and damaging the US economy?

To: gregor_us who wrote (42288)	4/21/2005 9:29:33 AM
From: michaelrunge	Read Replies (1) \| Respond to of 206161

>China Will Not Sell Their Dollars, imo. Japan is Unlikely to do so either. Let me explain Maybe they will, maybe they won't, but I think the relevant question to ask is "will they continue to buy at increasing rates and will they continue to roll over the treasuries that mature". I think the answer to that one is a definitive "no". In an automobile accident, the injuries don't occur when the car comes to a stop. It happens when the car's speed and direction begin to change -- at or just after some inflection point. I think that's right about where we could be right now. Mike