Interesting stuff. Looks like the Fed found the perpetuum mobile or the golden bullet solution to American public debt. If foreign institutional investors won't buy future bond issues, don't dispair, we'll print some more and buy them ourselves. If there is a large scale run out of bonds, no problem, well print some more and buy them all. Keep doing it until the USD is worth EURo 0.20 and then pay off the whole public debt at 20 cents in the dollar.
Sounds communist if you ask me. And, it didn't work there either. The problem with a system in which the local currency is artificially kept high on domestic markets while being traded at a much lower rate internationally is that you end up nevr having enough foreign currency reserves and are stuck in a never ending downwards spiral. Now, before anyone trashes me and informs me that nothing like that is even remotely suggested in the article and could never happen in the US anyway because the USD is the world reserve currency, etc., etc., let me say this: the mere fact that the Fed is doing what it's doing clearly shows just how desperate the situation is. And maybe my scenario is already less unbelievable if you consider that recently liberated iraqis have bid up their old dinar against the USD despite the fact that they can't buy a thing with it in Kuwait, Syria or Jordan. By the same token, they wouldn't get too much for a USD in Iran nowadays either, where the EURo seems to be replacing it as the black market standard of choice. Heck, even Eastern Europeans are starting to prefer the EURo over the USD. All this would have been unimaginable less than three years ago... Cheers, Robert. budget & privacy website hosting http://www.cyberica.net budget & privacy domain registrations http://www.u2planet.com --- You are currently subscribed to e-gold-list as: [EMAIL PROTECTED] To unsubscribe send a blank email to [EMAIL PROTECTED] Use e-gold's Secure Randomized Keyboard (SRK) when accessing your e-gold account(s) via the web and shopping cart interfaces to help thwart keystroke loggers and common viruses.
