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3 years, 7 months ago
  • semiguy commented on the diary post We Killed Bin Laden. It Had To Be Done, But It Is Nothing To Be Proud Of by Bill Egnor.

    2011-05-02 08:07:40View | Delete

    And Kabuki101 takes the comment of the day award.

    My biggest question is: Who will be the next Emmanuel Goldstein?

  • Sorry, infrequent poster these days.

    One issue I haven’t seen addressed here that seems to get some attention on ‘investment’ sites is the role of US dollar carry trade in all this.

    The argument goes something like this:

    If your typical TBTF bank with FED window access can borrow at zero interest and then has the ability to turn around and buy, for example, Australian bonds at ~4.5% interest, and do it with typical 50x or 100x leverage, why wouldn’t they do this rather than put the money in a dollar-based asset? It’s extra attractive when the TBTF can redeem the bonds for devalued US dollars down the road.

    This is the dynamic that kept the Japanese economy in a zombie state for a decade or more. There’s absolutely nothing preventing the US economy from being used in the same way.

    The additional lovely part is that all reserve banks seem to be actively promoting the carry trade dynamic. Witness the coordinated interventions following Fukushima. Another example of heads, we win, tails, we win…

    So, how is devaluing the dollar good for the US economy again???