" The dollar traded near a three-week high against the euro as a drop in stocks encouraged demand for safety and Russiaâs Finance Minister Alexei Kudrin said his nation has full confidence in the U.S. currency." http://www.bloomberg.com/apps/news?pid=20601083&sid=ayfX_IocGi9c Is this russia's last move before they dump some T-Bonds?
Its like Peter Schiff said today "Why are they talking up the dollar? Its because they need to keep it propped up. You dont see russia or japan saying how much confidence they have in the euro. Its because they dont need to. Everyone has faith in those currencies. If the dollar was strong they wouldnt need to say how much faith that have in it either."
why anyone would have faith in the pile of shit that is the Euro is beyond me. half of their countries are insolvent. The coming rally in the USD will knock everyone's dick in the dirt. 98-102 DXY is coming.
He is right, people dont seem to understand the degree of which reflexivity plays in world reserve currencies. When a currency becames as important and widely used as the USD that creates a even bigger reason to use the currency: everyone does so you are forced to use as well, call it the windows effect This translates into the tendency for the country with the reserve currency to run trade/current account deficits(and a tendency for a secular decline in its value), not because their consumers are spending out of control but simply because that country have the means to finance their high spending through foreign capital flows: the dollar holders have to invest their dollar reserves somewhere, that usually is US T-bonds, corporate bonds(which include mortgage bonds) and stocks, although a significant fraction of US paper currency is held abroad The dollar is likely to remain the world's reserve currency for longer than anyone expects simply because it makes sense for it to be. When people name XYZ as substitute they seem to forget one thing about them: nobody uses them so why should you, you will end up paying exchange fees and run into conversion issues if you try to do business in a international scale. The world reserve currency will change only when the consequences of the policies of that country get so bad people are forced to change, then reflexivity will work in reverse