Re: Value of the dollar

[David Farber <dave () farber net>]

Begin forwarded message:

From: "R.A. Hettinga" <rah () shipwright com>
Date: October 6, 2008 1:06:53 PM EDT
To: David Farber <dave () farber net>
Subject: Fwd: [gsc] Fwd: [IP] Value of the dollar



Begin forwarded message:

From: "Robert dCZ" <cyberfrontier.net () gmail com>
Date: October 6, 2008 12:57:38 PM GMT-04:00
To: gold-silver-crypto () rayservers com
Subject: Re: [gsc] Fwd: [IP] Value of the dollar

Okay, here is the simple explanation for the rise of the Dollar,
relative to most other curencies:

Banks and Funds are pulling out of equity and have to do something
with the cash. They can not put it into anything long-term and they
can't lend it to one another, so they buy bonds.

Most managers are looking at Europe and then at the US and see that
the latter is throwing away future tax revenue to 'protect' current
interests, while the EU countries are reluctant to work together
(rightfully and for obvious reasons so) to throw around money. While
this latter approach makes more sense, it also undermines the EUro as
no coherent policy is possible.

So they hedge their bets with buying US Treasury Bonds, thus
increasing demand for Dollars, which drives up the price. They are
also buying German Bunds, but next to no other EU paper, and the US
purchases outstrip the EU purchases.

In short, the Dollar goes up, because everything is a mess and the fat
cats in Washington are more trustworthy than the fat cats elsewhere in
terms of predictable greed and thus in them honouring their bonds.

Cheers,
Robert.






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