Norman
Diamond Member
- Sep 24, 2010
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And at the end of this possible carnage we have another 'little' problem: The ones that own your debt end up owning you!
the article bables on about curency valuation , while convienitly leaving out the Chinese bond raters
yeah, the Chinese are into us for big $$$'s , and they're actively pursuing an Asian monetary consortium , even have the IMF convinced to knock the USD off as a global benchmark
the typical canard here is, they loose if they do, which is propaganda in it's usual guise of horesh*t rhetoric
valuation and debt can be inversely proportional konkon, so allow me to forward an anology in order for you to comprehend this in simplest terms
let's say you owe me $100 USD
but because you owe everybody & their uncle, i'm going to convince my fellow lenders that USD in your pocket is worth 80% of what you say it is
Now, you owe me $120 USD
get it yet?
Bring on a competing reserve currency and it will be played like a fiddle. It will appreciate to the point of killing-off several export markets in Asia, while the west, led by the US and Europe, will be making money off of this trade.
There is more to the USD than just a widely used currency. There is a lot of hidden force behind it. Some will stand to lose a lot if the USD gets crushed. So I'm not betting against it. Don't forget the US has historically low interest rates, and they will go up; meaning potential investments and a flood of other currencies to hit the US markets once again. I can then see opportunists out there getting on this band-wagon.
I do get what's going on, and at the end of the day the US doesn't have to pay these debts and it can just show the proverbial finger to whoever doesn't like this. It has in the past and it will again. I think that there are more at play here than just a simple explanation of what is going on at the simplest level.
Get it?
No not really.
The interest rates can raise, because the economy is doing so bad too. They can raise because people don't expect the US gov to pay back, or because they expect more inflation.
In "normal" scenario they would raise because people can get better rates because better offering, but they can also raise if NO ONE trusts the US government.
You are putting the cart before the horse, interest rates don't drive the investments into dollars this time, interest rates are required to get the funding. There is no demand for american, that is why they will raise. It will just crash the whole economy as all businesses addicted to them are done for.
It's all supply and demand, and the demand part is affected by the risk, which is growing. Not by supply that is getting better in this case.
Well that's my take on it.
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