It’s true that official sector (i.e., central bank) foreign exchange holdings have declined in recent years. Remember “the conundrum”? Now, the US government finds it in its interest to foster panic to induce foreign central banks to deplete their Treasury holdings?Īnyway, let’s look at the data, and (gasp!) some research.įorex Reserves and Official Sector Holdings of Treasurys I find this description completely befuddling because for the preceding ten years, we had been pointing to foreign official sector acquisition of US Treasurys as propping up Treasury prices, and hence depressing Treasury yields. Eyermann then continues:Īll of which would go a long way toward explaining the Obama administration’s active pursuit of a multitude of half measures in response to various developing global crises. So far, so good (although I’m not sure it’s a “panic” that induces foreign central banks to conduct forex intervention, see this post). government can borrow more money at lower interest rates to sustain its spending… Treasuries, which pushed down their yields, which means that the U.S. Treasury holdings to prop up their currencies also prompted large numbers of U.S.-based individuals and institutions to buy more U.S. government gets one major benefit from having the world in financial turmoil-the same panic that prompted foreign central banks to sell their U.S. One of the craziest posts I have read in recent years alleges that the US government has deliberately set out to destabilize the world economy in order to … lower Federal financing costs!įrom M圜ostGov blog comes the post with the following alarming title: “World Banks Panic Selling U.S.
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