
As Dollars Pile Up, Uneasy Traders Lower the Currency’s Value  - mshafrir
http://www.nytimes.com/2009/05/23/business/economy/23dollar.html
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mellis
This seems overblown.

If you look at the attached graphic, you'll see that the dollar is back to
where it was at the start of October, two weeks after Lehman Brothers declared
bankruptcy and started a panic that drove flocks of investors to U.S. Treasury
bonds (whose yields fell almost to 0). This seems less an indication of
weakening confidence in the dollar than a sign that the fear of putting money
into anything but U.S. Treasuries is abating.

The article cites a couple of people concerned about inflation, but offers
little evidence that it poses a danger.

The economy is still vulnerable, but neither inflation nor a weakening dollar
should be our biggest worries.

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timr
You win the smartest comment in the thread award. It bums me out that some
nonsense rant about the gold standard is at +7, while your comment (with
opinion echoed by nearly every currency expert I've read) is down here in the
weeds.

There was a flight to quality following the bank failures. The drop in the
dollar is a good sign that the world's economies are starting to find better
places to put their money than US currency.

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daeken
"The United States remains the world’s default reserve currency, these experts
add, and Treasury debt is still considered the world’s safest investment."

When "experts" make statements like this, it becomes clear why we have the
problems we do. The world's safest investment...

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brl
Do you think that US treasury bills are not a relatively safe investment? That
would be quite a controversial thing to say.

~~~
daeken
Relative to what? I'll take precious metals over a fiat currency (any of them)
any day.

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brl
Suit yourself, but the price of gold will go wherever the powers that be want
it to go.

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daeken
Err, this is different from the Treasury how?

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seunosewa
If it's not different, then you have no reason to prefer one over the other.

~~~
daeken
The difference is that the market controls the price of gold, whereas the
Treasury's actions directly control the value of T-bonds and the like. Yes,
it's possible to impact the price of gold to an extent, but there's no way
anyone can argue the degree of control is even comparable. It just baffles me
that you can justify Treasury securities by saying you can artificially
control the price of gold.

~~~
brl
As it baffles me that you believe the opposite.

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steveplace
Why do traders have to be "uneasy?" Financial media needs to stop assigning
stories to short term noise.

This is one part of the reflation trade: short dollar, short treasuries, long
commodities, long risk assets (equities).

~~~
anamax
> Financial media needs to stop assigning stories to short term noise.

Interesting.

Any comments on the relative weight given to bad economic stories during
Bush's last three months and Obama's first three?

How about something simple - Obama produced "here's what will happen if the
stimulus package isn't passed" predictions during that debate. Some of those
predictions had "by" dates that have passed. Did you see a retrospective?
Would you have if Bush had done the same and had missed as badly? (We're a
little worse off than Obama predicted we'd be if the stimulus wasn't passed.
Maybe things would have been even worse, but that tells us that Obama's
modeling isn't as good as he thinks.)

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patrickg-zill
Why are they uneasy? They see the GM bondholders (secured debt) get screwed in
favor of the unsecured bondholders.

They figure if it can happen with GM under government control, it might happen
with USD, which is under the control of the same government.

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mynameishere
Freudian slip:

<http://www.youtube.com/watch?v=znZkxN0Ks0M#t=13m20s>

Hope you all have your shorts in and your stops tight.

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cellis
!hn. flagged.

