David: > Foreigners, instead of buying USA goods with the dollars they > receive for the goods shipped to the USA, invest the dollars > back into the USA, where they money filters through the economy > as investment capital. I assume this is occurring because the > foreigners believe the USA is a better place to invest than > outside of the USA. Go USA!
I don't think they are recycling their export dollars back to the US because they believe the USA is a better place to invest than outside of the USA. It is because of what came to be known in recent years as the "dollar hegemony." They usually do that by purchasing the US treasury bonds as the US treasury holdings of the East Asia demonstrates: China's US treasury holdings recently went beyond $1 trillion if I am not wrong and Japan's must be close to that too. The main reason why the US economy still able to breathe is the foreign holders of the US debt and other financial assets. If they let the US economy and together with it the US dollar collapse, their US dollar holdings will go worthless, which is a disaster for them too. If I were them I would buy real US assets such as land and other property with my dollars, as opposed to US debt and other financial assets, which would amount to a bloodless invasion of the US. Best, Sabri ____________________________________________________________________________________ Get your email and see which of your friends are online - Right on the New Yahoo.com (http://www.yahoo.com/preview)
