Why would they ever be forced to float their currency? If we keep going into greater and greater debt, won't we need them to buy more and more?
That's what I'm saying. Why does the press perpetuate the myth that it's China's fault their currency is artificially low? It's our own policymakers!
ok, ok, ok, but then why is Bush and his PR machine making such a big deal about Japan and China and their currency interventions. If we are correct, that the currency peggers are serving a very useful function financing our debt then why would Bush be grandstanding about it? Is he really such a moron? There must be something more...
Why is Bush and Co jawbone-ing the Japanese ? Think about it. America needs billions and billions to finance their screwups in Iraq and soon most of the middle east. They can borrow from Japan as in the past. THE TRICK IS THEY WANT THE YEN AROUND 85 TO THE $. Interest on large amounts from Japan is now around 0.15 % . If they borrow at strong yen they can pay back at lower yen and stronger US $. America would be ahead at this rate. That is why Clinton years were so good. They borrowed below 80 yen. The Japanese don't want to make the same mistake twice.
Japan is 75% dependant on Middle Eastern crude for its energy needs and has no significant navy to protect its interest in the flow of oil from the Gulf of Hormuz to Japan. The US is 13% dependant on Middle Eastern crude for its energy needs and has a fleet in the Pacific, an army in the Middle East and airforce bases ringed around the area. Aside from having to sell Sony playstations to the US to make a living, Japan (correction : the Japanese premier) has many incentives to keep the US happy, including writing checks for US military adventures, buying up T-bills etc. China is considerably more independant and is the bigger wild card in the picture. Once they wean themselves off Middle Eastern crude, then they'll get really obnoxious.
This reminds me of a description I once read of the old Soviet Union economy: "They pretend to pay us and we pretend to work." In this case, they pretend our dollar is sound and we pretend we'll pay back our bonds.
The U.S. regularly "talks" the dollar up or down to try to move it as they see fit. Like "Fed Speak" one is never quite sure of the motives behind current statements. Wally
Who would have thought that Buffet would play an integral role in the devaluation of the US Dollar. Believe it or not, the chap is shorting the dollar (which is the same, as far as i am concerned, as buying foreign currencies). Even though the Bushg administration has recently been active in pushing the dollar down, it looks like the dollar will decline at a much greater rate than initially anticipated.....cause, as they say, when Buffet is short, the WHOLE WORLD IS SHORT..... Conclusion: US, prepare for some drastic (previously unanticipated) inflation! And who is to blame? Soros? nope....believe it or not BUFFET. Pretty interesting actually...
You're kidding right? Buffett could leverage his entire net worth into a short dollar trade and still be a mere blip on the radar screen. Guys like him and Soros didn't make their money bullying the markets, they made it by riding the tides. No trader or investor in the world is bigger than the currency markets.
I would like to see a followup discussions to the debt is the U.S. 's damn fault. It may be or it may not be. I no longer have the disciplined mind to create those ecomnomic flow charts I loved making myself do college. But I suspect marginal this still equals marginal that. consequenlty, this could also be a chicken or the egg thing. Perhaps we are running current account deficits because foreign countries are choosing to invest in the dollar and treasury debt. (unnaturally) Thereby throwing a free market out of kilter. The u.s. consumers are only responding to stimulus. Just think the U.S. beat the Japanese on the huge real estate deals in the 70s and 80s when we were suppossed to be idiots. The 70s inflation beat up the people who invested in savings bonds and the like. And now when the currency riggers try to cash in the U.S. debt they could get hit with the perfect storm of an inflating dollar and rising yields/shrinking capital in the bond market. The market maybe the perfect mechnisim to teach the currency riggers a trick and the U.S. consumer is just reponding to underprice goods from China, Japan and Europe. Responses invited.