On Tue, 18 Jan 2005 21:31:13 +0000 (UTC), Robert J. Chassell <[EMAIL PROTECTED]> wrote: > Regarding the US trade or current account deficit, Erik Reuter > <[EMAIL PROTECTED]> wrote <snip> > What if (for whatever reason) non-central bank foreigners decide that > the US is not a better place for money than, say, western Europe? > (For example, perhaps their `precautionary' motive shifts to favor > western Europe.) > > Can the central banks of China and Japan intervene sufficiently to > prevent a drop of the dollar?
Japan and China banks are why the US dollar has not slid further. They are our biggest creditors for a simple reason. If they keep the dollar high their goods have a pricing advantage and they can continue to export. > > Will raising US Fed interest rates to, say, 6% reverse a flow away > from the US dollar for more than 2 years? > > (Right now, so I am hearing, an anticipated increase in US interest > rates, and corresponding drop in the value of bonds, is expected bring > foreign money to the US, thereby raising the value of the dollar. The > subsequent slowdown in the world economy is expected to hurt China, > Europe, and Japan more than the US. Do you think this expectation is > true; and if so, for how long?) All very good questions. Gary Denton _______________________________________________ http://www.mccmedia.com/mailman/listinfo/brin-l
