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Strategies & Market Trends : The coming US dollar crisis -- Ignore unavailable to you. Want to Upgrade?

To: Real Man who wrote (25428)	12/11/2009 10:28:58 AM
From: gregor_us	1 Recommendation Read Replies (1) \| Respond to of 71455

I only have moderate clarity about one aspect of the sovereign debt mess and in particular USTreasuries: it's been my view that USTReasuries will run into trouble before the USD does. How long the time-spread is between those two events is totally unclear to me. We are in the recognition phase, for many assets and situations now. So, I see USTreasuries, when they run into real trouble, getting very ugly before anything very ugly happens to the USD. Recognition phase action is very dangerous. It's the moment that the elm tree, which has been hollowed out for years with disease, is discovered by two 7 year old boys who figure out "hey we can push a whole tree over." G

To: Real Man who wrote (25428)	12/11/2009 10:43:54 AM
From: HH	Read Replies (1) \| Respond to of 71455

QE defined After the fed has dropped interest rates to almost nothing, it has lost the ability to stimulate with lower interest rates. At that stage central banks start to employ quantitative easing (QE). QE is a natural extension of monetary policy once interest rates reach zero. Rather than influencing borrowing levels by changing the price of credit, the central bank attempts to influence borrowing levels by increasing the commercial banks' reserves (on which the total economy-wide level of credit is primarily based) – hence the name "quantitative easing". The central bank does this by increasing the size of both sides of its balance sheet – in particular by creating money. That money is used to increase the level of excess reserves held by the commercial banks at the central bank. Commercial banks can then draw upon those reserves and lend them on to the private sector, so increasing borrowing levels. Technically the central bank buys assets (typically government debt) from the commercial banks (or other agents) and credits the commercial banks' reserves at the central bank. This results in an increase in the monetary base (currency in circulation plus reserves at the central bank) which may lead to a rise in inflationary pressures.