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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: ild who wrote (45183)	11/9/2005 1:32:18 PM
From: ild	Read Replies (1) \| Respond to of 110194

Date: Wed Nov 09 2005 13:15 trotsky (i forgot to mention) ID#248269: Copyright © 2002 trotsky/Kitco Inc. All rights reserved another MAJOR reason for the dollar's strength this year against most other currencies is the fact that US money supply growth has been far slower than that recorded elsewhere. in short, foreign countries have printed even more fiat money this year than the Fed. Date: Wed Nov 09 2005 13:13 trotsky (Carmack) ID#248269: Copyright © 2002 trotsky/Kitco Inc. All rights reserved as i said, the dollar has been going up ever since the interventions have STOPPED. the reason is the rising interest rate differential between the dollar and other major currencies. for instance, the carry between short term Euro rates and the dollar is a full 200 basis points now, and obviously it's even more in terms of the Yen. this 'adding up the short terms' is nonsense for the following reason: say there's by way of example an announcement that the BoJ buys 20 billion dollars today ( a drop in the ocean of a currency market that trades trillions every day ) and the Yen falls a full Yen against the dollar on this announcement. however, the next day, the Yen's losses disappear, as traders know the BoJ isn't in the market anmore. in short, the loss on the announcemnt is merely caused by traders waiting for the Yen they wanted to buy anyway to come to them a little cheaper. in the end, there's nothing left to 'add up'. this has been a consistent pattern throughout the intervention periods. over the past 50 years, the dollar has fallen by almost 80% against the Yen - in spite of the fact that Japan has been the biggest currency market intervener in the history of mankind, always trying to produce a WEAKER Yen. you tell me how successful they were. Date: Wed Nov 09 2005 13:02 trotsky (mozel@BoJ) ID#248269: Copyright © 2002 trotsky/Kitco Inc. All rights reserved yes, it may have worked for one day maybe. during their most massive intervention period ever, from early 2002 to late 2004, the Yen kept going higher ( they intervened to the tune of several 100 billions of dollars during that time ) . when they finally gave up and stopped the intervention, the Yen immediately embarked on a down trend ( they have not spent one dime on intervention throughout 2005 ) : tfc-charts.w2d.com in other words, while there seems to be no proof that intervention DOES work, there is plenty of proof that it doesn't.