Re:Where has all the money in the world gone?
by adventureful on Saturday June 23, 2012 @06:00AM
(#4150499)
It would take extreme desperation for someone like Japan to call in their held paper. That's an entirely plausible scenario though, given their debt loads.
However, the US could push a button and 'print' $2 trillion tomorrow morning in a monster QE3, and then hand Japan and China each a trillion dollars and nearly pay them off completely. All it would do is probably push the dollar index back down into the mid 70's, where it was 9 to 12 months ago. The bigger problem would actually be confidence, such a move would freak everybody out. Instead the Fed prefers to gradually inflate the value of Chinese and Japanese debt holdings away (which is also why China has taken such a liking to gold).
However, the US could push a button and 'print' $2 trillion tomorrow morning in a monster QE3, and then hand Japan and China each a trillion dollars and nearly pay them off completely. All it would do is probably push the dollar index back down into the mid 70's, where it was 9 to 12 months ago. The bigger problem would actually be confidence, such a move would freak everybody out. Instead the Fed prefers to gradually inflate the value of Chinese and Japanese debt holdings away (which is also why China has taken such a liking to gold).