Will the dollar crash soon?? China to sell US treasuries???

M

mediaboyz_IHB

New member
<pre><tt><tt>If China dumps dollars by selling some of the $1
trillion+ of our US treasuries on the market, we will
be in a world of hurt: The Fed will have to
aggressively increase interest rates to counteract the
inflation that will occur or the dollar will tank or a
combination of both.

Its interesting that the Fed stopped reporting on M3
earlier this year, the total supply of US dollars
outside of the country. I wonder why? Anyone up for
investing overseas or buying gold ??

<a href="http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/08/07/bcnchina107a.xml" target="_blank">http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/08/07/bcnchina107a.xml</a></tt></tt></pre>
 
I'd be interested in hearing thoughts on short term t-bills being a safe haven from such an event. Would the discount rate shoot high enough to preserve the value of one's dollar holdings?
 
China/Japan dumping treasuries has been a huge contention of the bears (or gold bulls) for years and years and years...I remembered reading about it back in 02-03 and thought even back then that the arguments were sound. But it still has yet to happen.
 
I said this on another thread, but a dump of $1.3 trillion will not have a serious or long-term impact on the global currency markets. These markets are just too large. <a href="http://en.wikipedia.org/wiki/Foreign_exchange_market">Forex </a>trades $2 tillion a day. I think the Chinese could create short-term problems with such a move, but it will not be a disaster.
 
But Mr. Containment aka Paulson said that the rumors of China dumping our bonds are ludicrous and just unfounded rumors. I feel better knowing that Paulson said that. What a relief.
 
Yeah, Paulson is not a particularly good market cheerleader. His bullshit is just too obvious. He is lying, he knows he is lying, and everyone who listens to him or reads his writings knows he is lying. What's the point?
 
I don't believe that the Chinese will do it.. . . they can't afford to do it because 1) it would make the US angrier and China needs the continual outside investments and 2) Devaluing the U.S. Dollar will either result in the devaluation of the Chinese yuan (currently locked with the dollar) or dramatically increase the price of their exports into the U.S. (I mean people buy Chinese goods largely because they're cheap). It would also have a negative impact upon Hong Kong (who has its own currency).
 
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