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

To: Larry S. who wrote (64629)	6/26/2006 10:18:58 PM
From: ild	Respond to of 110194

<<<BUT, how long are they going hold up our dollar, knowing that it will eventually drop in value? Already, CBs are reducing their dollar reserves.>>> Larry, you are asking good questions. As I see only some small CBs are able to reduce their dollar reserves. What they do is to dump their reserves to another countries, but not back to the US. The dollar is becoming hot potato. Bigger CBs like China, Japan, oil producers are receiving new batches every day. The only way they can really send dollars back is to buy something in the US. China wanted to buy Unocal but they weren't allowed. How do I see this will end? By severe recession in the US accompanied by the falling USD. We will start exporting more and importing less. Of course all foreign holders of USDs will lose their shirts too.

To: Larry S. who wrote (64629)	6/26/2006 10:23:34 PM
From: benwood	Read Replies (2) \| Respond to of 110194

It is their purchases, esp. in prior years, that has subsidized our federal shortfall. But the dollars they are using to buy treasuries for the most part have come from the trading imbalance. The trade imbalance accumulates and becomes a problem for them... without the accumulation of the dollars from trading imbalances, they wouldn't bite off on buying Treasuries unless they were cheaper (e.g. higher interest rates). Does that make sense? Maybe Russ could weigh in -- he's the one who's done so much to explain this concept, and I hope I'm explaining it correctly.

To: Larry S. who wrote (64629)	6/27/2006 12:31:32 AM
From: shades	Read Replies (2) \| Respond to of 110194

how long are they going hold up our dollar, knowing that it will eventually drop in value? We still have jobs to bleed - what is more important to politicians larry - the value of a piece of paper or staying in office? If they don't keep the good times rolling - the masses start getting hard to placate eh? So either the china man gets pissed and replaces the incumbents or the american man gets pissed and replaces them - there aren't enough jobs to go around it seems for both gubbments - the currency is just an abstraction. When they can no longer suck jobs from the west - things will get interesting no?