Jim: > An individual central bank would like it if > the _other_ CBs were to hold on to their dollar > assets, so it can dump them at a high price. > Why is it that the simple economy prediction > -- i.e., that they'd all rush to the exits causing > a crash -- hasn't worked out yet?
Actually the "standard economy" prediction holds here. In this game each central bank knows that if they start dumping their dollar assets, the others will not wait until they finish dumping all of their holdings, indeed the others will jump in almost immediately, in which case all are screwed. So it is optimal for each of the banks not to dump their dollar assets. In other words, the US some time in the past grabbed all of them by the balls. They have to find a collective solution to this problem, that is, at some point they have to collude, because it is certain that they cannot keep buying the US financial assets forever. Sabri ____________________________________________________________________________________ Everyone is raving about the all-new Yahoo! Mail (http://advision.webevents.yahoo.com/mailbeta/)
