December 12, 2009

Be careful what you wish for

I read this article this evening and am a bit floored that Sen. Reid would ok and or write such a letter. He doesn't strike me as being much in the know about currency and international trade. I would sure like to analyze what this would do to the value of the dollar. Thinking out loud if chinas currency were to appreciate in value it could happen in two ways: first they could pull currency off the market and destroy some of their currency. Or second they could flood the market with some dollars which they hold quite a bit of in their currency accounts, and buy less dollars going forward.
How is that good for us? We are running record deficits and need now more than ever for foreign countries to by our treasuries so that we can finance our deficits.

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