Quote:
Originally Posted by LWJ
I am not even an armchair economist. But, you mentioned that value of the dollar is diminished.
I see exchange rates being very favorable in the last 12 months.
This is a question, as I am out of my expertise here.
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I knew this question was coming and that is why I said, "Intrinsic value."
All currencies are balanced against the USD to maintain an equilibrium..Since those nations economies are in worse shape the USD is stronger vis a vis those currencies.
Many nations have had to use their USD and Gold reserves to pay bills. Thus they need to buy USD's with their currency when a short fall occurs..
Then there is the REVERSE REPO Window where the FED takes in USD's and gives out short term Treasuries on a daily rollover basis..It is over 2T a day now.
Institutions need the secure capital of a US Treasury to use as collateral against their junk bond portfolios.. That is another can of worms to digest. Which ultimately means that a lot of corps ain't doin so swell.