Bank Of Thailand ' Coping With Inflows'

[webfact]

BOT 'coping with inflows'
Kwanchai Rungfapaisarn
The Nation


Bank of Thailand Governor Prasarn Trairatvorakul appears at the first

BANGKOK: -- Central bank chief says it's a myth that high interest rate attracting capital; Prasarn says measures to tackle influx awaiting nod from Finance Ministry

Bank of Thailand (BOT) Governor Prasarn Trairatvorakul said the central bank has measures in place to cope with volatility caused by either capital inflows or outflows, insisting that adjusting the policy rate alone could not help Thailand swim against the tide.

The governor said yesterday that the baht has actually stabilised in the past three to four weeks, without the central bank's interference. Inflows are slowing down, even with the policy rate maintained at the current level, he said.

He said the baht's rapid appreciation in the first few months of this year was a result of the currency coming in line with other regional currencies' exchange rates against the dollar, and that investors had simply "caught up". Since the end of 2011, the Thai currency has appreciated by 5.6 per cent against the dollar. However, the Philippine peso has surged by 7.9 per cent and South Korea's won by 6.4 per cent.

"It's a myth that a [relatively] high interest rate has attracted more capital inflows, causing a flood of excess liquidity and an appreciation of the baht, leading to asset price bubbles," he said.

"The fact is that the liquidity conditions would be the same [even with a rate cut], as there are dollar buyers out there, and it's not the central bank," he said.

The baht strengthened 0.1 per cent yesterday - and for the week - trading at 29.84 per dollar as of 3.07pm in Bangkok, according to data compiled by Bloomberg. The currency has climbed 2.5 per cent in 2013, the best performance in Asia.

Prasarn said the central bank has measures in place to tackle volatility caused by either outflows or inflows, thanks to its foreign reserves of as much as US$180 billion (Bt5.37 trillion).

He said that the BOT had devised measures to tackle the influx of capital into the country, especially the flexible exchange rate and the support of capital outflows by Thai investors.

It has sought Finance Ministry approval for measures that need its consent.

"Measures will be launched at the appropriate time, as they will have costs. We [the BOT] have looked very carefully into the matter, and at the use of appropriate measures. Any detailed declaration [of these] may not be good for the country," said Prasarn.

Prasarn said it was not true that the high capital inflow into the country would lead to excess liquidity and an assets bubble.

He said that the situation in Thailand now is that the interest rate has been kept low for some time, encouraging individual Thais to invest more in risk assets, rather than keeping their money in banks. This has led to excessive purchases of other assets, such as condominiums and stocks.

The Stock Exchange of Thailand Index yesterday rose 0.74 per cent, or 11.39 points, to 1,540.13 points. The market has been on the rise, though foreign investors this month remain net-sellers.

Prasarn added that the continued monetary easing by the Group of three economies (the US, Japan and Europe) and a decline in risk aversion since mid-2012 had boosted capital flows to Thailand as well as other economies in the region.

"The improved Thai economic outlook relative to other regional economies has also contributed to the baht's recent outperforming [of other currencies]. Major risks remain for some other countries in the region. Korea has seen some adverse impact from the Japanese yen's depreciation. Malaysia is experiencing political uncertainty ahead of the upcoming election, which will be held on June 13. Indonesia and India see chronic current account and fiscal deficits, respectively," Prasarn said.

"Many investors have relocated their investments to Thailand due to the country's strong economic fundamentals and low exposure of foreign investment to the Thai financial markets," he said.

Easy monetary policy in major countries in Asia had driven global investors to search for higher yields, he added.


-- The Nation 2013-02-23

[Locationthailand]

It still amazes me the dollar is even at this level when the US is so broke and yet their spending continues. With GDP about 1/3rd of its debt, it has no way to repay and by continuing to print money to pay debt, means the world at large must be stupid to keep accepting it as the reserve currency. The continuing 'appreciation' of the currencies such as Baht, Won and Peso is simply the USD is getting weaker, nothing to do with their strength of local currencies. IMO USD should be around 22 Baht not 30.

[Ricardo]

Perhaps the BOT will shortly declare, that the recent strengthening of the Baht is also extremely good, for exports and rice-mountain-sales and tourism ?

If global investors are searching for higher yields, how can relatively-high Thai rates not be attracting capital inflows, just because they've slowed this month on expectation of a BOT rate-cut, the foreign capital is still here ?

And if high capital inflow won't lead to an asset-bubble, but Thais themselves are making excessive purchases of condominiums or stocks, is that not still a bubble, which may eventually burst ?

Is someone fiddling, while Rome burns Bangkok sinks, and the Baht rises ?

[F430murci]

It still amazes me the dollar is even at this level when the US is so broke and yet their spending continues. With GDP about 1/3rd of its debt, it has no way to repay and by continuing to print money to pay debt, means the world at large must be stupid to keep accepting it as the reserve currency. The continuing 'appreciation' of the currencies such as Baht, Won and Peso is simply the USD is getting weaker, nothing to do with their strength of local currencies. IMO USD should be around 22 Baht not 30.

---------------------------------------------------------

Printing money, QEs, is much more complicated than paying debt. More about shoring up world banking reserves and backlashes from CMO. QE money has actually landed in the holes that needed filing, much like water seeking the lowest point. Research how much of QE3 has ended up in foreign markets where the banking weaknesses remain. Hate to break it to you, Feds actions is actually keeping world banking afloat more than US at this point in the recovery process. Fed and US could gave just shored up US banking and let European and world banking fend for itself, but it didn't. Rather than read whack a doodle internet sites that comain about anything US, take an objective look at it. Gratitude toward US not being so selfish might be more warranted.

And no, . . . US is not even remotely close to defaulting and will never default on it's obligations. If it gets to that point, all other world finial systems including Thailand will have already failed.

No offense, but statements like yours are just parroting ridiculous political rhetoric that has very litlle to rivalry reality. The truth is, our currency keeps the world currency in check.

Do you realize, we could destabilize China in a matter if 30 days which would take Thailand and all SE Asia finacial with it. China's currency is way more manipulated that US and US keeps it from the Yuan from appreciating and imploding China's entire economy.

We hold so much Chinese currency to keep the Yuan from appreciating, we could stop their entire economy in 30 to 60 days. Default, keep their money and we have 5 trillion and they have hyper inflation and an absolute inability to sell their cheap crappy products at rock bottom low price. What do you think that would do to the Baht?

The US currency is actually the only stable currency.

Edited February 23, 2013 by F430murci

[Pinot]

It still amazes me the dollar is even at this level when the US is so broke and yet their spending continues. With GDP about 1/3rd of its debt, it has no way to repay and by continuing to print money to pay debt, means the world at large must be stupid to keep accepting it as the reserve currency. The continuing 'appreciation' of the currencies such as Baht, Won and Peso is simply the USD is getting weaker, nothing to do with their strength of local currencies. IMO USD should be around 22 Baht not 30.

---------------------------------------------------------

Printing money, QEs, is much more complicated than paying debt. More about shoring up world banking reserves and backlashes from CMO. QE money has actually landed in the holes that needed filing, much like water seeking the lowest point. Research how much of QE3 has ended up in foreign markets where the banking weaknesses remain. Hate to break it to you, Feds actions is actually keeping world banking afloat more than US at this point in the recovery process. Fed and US could gave just shored up US banking and let European and world banking fend for itself, but it didn't. Rather than read whack a doodle internet sites that comain about anything US, take an objective look at it. Gratitude toward US not being so selfish might be more warranted.

And no, . . . US is not even remotely close to defaulting and will never default on it's obligations. If it gets to that point, all other world finial systems including Thailand will have already failed.

No offense, but statements like yours are just parroting ridiculous political rhetoric that has very litlle to rivalry reality. The truth is, our currency keeps the world currency in check.

Do you realize, we could destabilize China in a matter if 30 days which would take Thailand and all SE Asia finacial with it. China's currency is way more manipulated that US and US keeps it from the Yuan from appreciating and imploding China's entire economy.

We hold so much Chinese currency to keep the Yuan from appreciating, we could stop their entire economy in 30 to 60 days. Default, keep their money and we have 5 trillion and they have hyper inflation and an absolute inability to sell their cheap crappy products at rock bottom low price. What do you think that would do to the Baht?

The US currency is actually the only stable currency.

Whenever I read criticism of the US, I know Fox News was on as it was being typed. I appreciate the sanity.

[ggold]

X

It still amazes me the dollar is even at this level when the US is so broke and yet their spending continues. With GDP about 1/3rd of its debt, it has no way to repay and by continuing to print money to pay debt, means the world at large must be stupid to keep accepting it as the reserve currency. The continuing 'appreciation' of the currencies such as Baht, Won and Peso is simply the USD is getting weaker, nothing to do with their strength of local currencies. IMO USD should be around 22 Baht not 30.

---------------------------------------------------------

Printing money, QEs, is much more complicated than paying debt. More about shoring up world banking reserves and backlashes from CMO. QE money has actually landed in the holes that needed filing, much like water seeking the lowest point. Research how much of QE3 has ended up in foreign markets where the banking weaknesses remain. Hate to break it to you, Feds actions is actually keeping world banking afloat more than US at this point in the recovery process. Fed and US could gave just shored up US banking and let European and world banking fend for itself, but it didn't. Rather than read whack a doodle internet sites that comain about anything US, take an objective look at it. Gratitude toward US not being so selfish might be more warranted.

And no, . . . US is not even remotely close to defaulting and will never default on it's obligations. If it gets to that point, all other world finial systems including Thailand will have already failed.

No offense, but statements like yours are just parroting ridiculous political rhetoric that has very litlle to rivalry reality. The truth is, our currency keeps the world currency in check.

Do you realize, we could destabilize China in a matter if 30 days which would take Thailand and all SE Asia finacial with it. China's currency is way more manipulated that US and US keeps it from the Yuan from appreciating and imploding China's entire economy.

We hold so much Chinese currency to keep the Yuan from appreciating, we could stop their entire economy in 30 to 60 days. Default, keep their money and we have 5 trillion and they have hyper inflation and an absolute inability to sell their cheap crappy products at rock bottom low price. What do you think that would do to the Baht?

The US currency is actually the only stable currency.

And there I was thinking China could do the same to the US, they are holding quite a bit of US Debt are they not? Edited February 23, 2013 by ggold

[creck]

It still amazes me the dollar is even at this level when the US is so broke and yet their spending continues. With GDP about 1/3rd of its debt, it has no way to repay and by continuing to print money to pay debt, means the world at large must be stupid to keep accepting it as the reserve currency. The continuing 'appreciation' of the currencies such as Baht, Won and Peso is simply the USD is getting weaker, nothing to do with their strength of local currencies. IMO USD should be around 22 Baht not 30.

---------------------------------------------------------

Printing money, QEs, is much more complicated than paying debt. More about shoring up world banking reserves and backlashes from CMO. QE money has actually landed in the holes that needed filing, much like water seeking the lowest point. Research how much of QE3 has ended up in foreign markets where the banking weaknesses remain. Hate to break it to you, Feds actions is actually keeping world banking afloat more than US at this point in the recovery process. Fed and US could gave just shored up US banking and let European and world banking fend for itself, but it didn't. Rather than read whack a doodle internet sites that comain about anything US, take an objective look at it. Gratitude toward US not being so selfish might be more warranted.

And no, . . . US is not even remotely close to defaulting and will never default on it's obligations. If it gets to that point, all other world finial systems including Thailand will have already failed.

No offense, but statements like yours are just parroting ridiculous political rhetoric that has very litlle to rivalry reality. The truth is, our currency keeps the world currency in check.

Do you realize, we could destabilize China in a matter if 30 days which would take Thailand and all SE Asia finacial with it. China's currency is way more manipulated that US and US keeps it from the Yuan from appreciating and imploding China's entire economy.

We hold so much Chinese currency to keep the Yuan from appreciating, we could stop their entire economy in 30 to 60 days. Default, keep their money and we have 5 trillion and they have hyper inflation and an absolute inability to sell their cheap crappy products at rock bottom low price. What do you think that would do to the Baht?

The US currency is actually the only stable currency.

Your post has intrigued me. I am certainly am no financier or

banker nor do I have much money or gold. However, I think I ought to be able to

understand what you write about. But I cannot.

‘QE is much more complicated than paying debt’ this

statement implies that the Federal Reserve has a choice and it chooses to print

money even though it could repay the debt! Frankly, I do not believe that. The US debt is

about equal to the GDP and there is no way the Fed could repay anything like

significant amounts in the same time frame that it can ‘print money’. That is

the problem that the Fed has solved.

You say that they do it to ‘shore up’ world banking reserves

and backlashes from CMO. The CMO failure caused some banks to fail and most

banks (but not the Islamic banks) to be in deep debt trouble. How does

reducing the value of the dollar help those central banks holding vast amounts of

reserves in dollars? What is the relevance of the CMO failure; apart from that the

banks may receive numerically more dollars for the properties they now hold?

‘Manipulating’ of their currency is done by all governments

when they need to. That is what is happening to the US Dollar – is it not?

‘We could destabilize China [financially]’ I’m sure that statement

is not true. The common Yuan is not convertible and I am extremely surprised if

the Fed holds any significant amount if at all.

(I assume you use ‘We’ loosely to mean the American Federal Reserve.) China

could easily buy up any amount. After all they only have a national debt of 25%

of GDP.

The ‘cheap crappy products’ seem to sell quite well around

the world. I have seen those goods increase in quality enormously in my lifetime

and I see no reason why that should not accelerate. In a few years the RMB may

be convertible (although they have been talking about it for decades!) and their

economy may become the largest in the world. You should be careful what you say

about them.

Or maybe; you are just making this all up just to get some

posts. In which case I’m sorry I took the bait.

[KKvampire]

The thai economic strength is a mile wide and half an inch thick

[Locationthailand]

It still amazes me the dollar is even at this level when the US is so broke and yet their spending continues. With GDP about 1/3rd of its debt, it has no way to repay and by continuing to print money to pay debt, means the world at large must be stupid to keep accepting it as the reserve currency. The continuing 'appreciation' of the currencies such as Baht, Won and Peso is simply the USD is getting weaker, nothing to do with their strength of local currencies. IMO USD should be around 22 Baht not 30.

---------------------------------------------------------

Printing money, QEs, is much more complicated than paying debt. More about shoring up world banking reserves and backlashes from CMO. QE money has actually landed in the holes that needed filing, much like water seeking the lowest point. Research how much of QE3 has ended up in foreign markets where the banking weaknesses remain. Hate to break it to you, Feds actions is actually keeping world banking afloat more than US at this point in the recovery process. Fed and US could gave just shored up US banking and let European and world banking fend for itself, but it didn't. Rather than read whack a doodle internet sites that comain about anything US, take an objective look at it. Gratitude toward US not being so selfish might be more warranted.

And no, . . . US is not even remotely close to defaulting and will never default on it's obligations. If it gets to that point, all other world finial systems including Thailand will have already failed.

No offense, but statements like yours are just parroting ridiculous political rhetoric that has very litlle to rivalry reality. The truth is, our currency keeps the world currency in check.

Do you realize, we could destabilize China in a matter if 30 days which would take Thailand and all SE Asia finacial with it. China's currency is way more manipulated that US and US keeps it from the Yuan from appreciating and imploding China's entire economy.

We hold so much Chinese currency to keep the Yuan from appreciating, we could stop their entire economy in 30 to 60 days. Default, keep their money and we have 5 trillion and they have hyper inflation and an absolute inability to sell their cheap crappy products at rock bottom low price. What do you think that would do to the Baht?

The US currency is actually the only stable currency.

Sadly you appear to be believe the media about the security of the US 'reserves'. This is not any personal dig against you - it is simply fact. China actually swapped a lot of US debt instruments recently (3 Trillion) for US gold. Now that was really smart because as the US was unable to service its debts, so by swapping US gold China actually made substantial gains (already) as well as removing paper that was worthless. Yes US could trade out but at present that is unlikely. US and China are unwilling bedfellows at present because Trade Goods are essential to the US economy or your pricing for domestic goods would skyrocket. Similarly if US defaults on more payments, China will have to accept the US delinquency because they have allowed US to run up the credit scores without any hope of settlement. So right now believe what you will but China is in surplus and US is in substantial debt (around USD60 trillion if you research it) - that kinda puts it all in perspective. Best wishes for your future.

[F430murci]

X

It still amazes me the dollar is even at this level when the US is so broke and yet their spending continues. With GDP about 1/3rd of its debt, it has no way to repay and by continuing to print money to pay debt, means the world at large must be stupid to keep accepting it as the reserve currency. The continuing 'appreciation' of the currencies such as Baht, Won and Peso is simply the USD is getting weaker, nothing to do with their strength of local currencies. IMO USD should be around 22 Baht not 30.

---------------------------------------------------------

Printing money, QEs, is much more complicated than paying debt. More about shoring up world banking reserves and backlashes from CMO. QE money has actually landed in the holes that needed filing, much like water seeking the lowest point. Research how much of QE3 has ended up in foreign markets where the banking weaknesses remain. Hate to break it to you, Feds actions is actually keeping world banking afloat more than US at this point in the recovery process. Fed and US could gave just shored up US banking and let European and world banking fend for itself, but it didn't. Rather than read whack a doodle internet sites that comain about anything US, take an objective look at it. Gratitude toward US not being so selfish might be more warranted.

And no, . . . US is not even remotely close to defaulting and will never default on it's obligations. If it gets to that point, all other world finial systems including Thailand will have already failed.

No offense, but statements like yours are just parroting ridiculous political rhetoric that has very litlle to rivalry reality. The truth is, our currency keeps the world currency in check.

Do you realize, we could destabilize China in a matter if 30 days which would take Thailand and all SE Asia finacial with it. China's currency is way more manipulated that US and US keeps it from the Yuan from appreciating and imploding China's entire economy.

We hold so much Chinese currency to keep the Yuan from appreciating, we could stop their entire economy in 30 to 60 days. Default, keep their money and we have 5 trillion and they have hyper inflation and an absolute inability to sell their cheap crappy products at rock bottom low price. What do you think that would do to the Baht?

The US currency is actually the only stable currency.

And there I was thinking China could do the same to the US, they are holding quite a bit of US Debt are they not?

Not really. This is an over simplification, but the value of the Yuan is set internally by State counsel and not subject to float. The Yuan is very difficult to convert to other currencies and visa versa. Making the Yuan subject to float would result in a true valuation of the Yuan and kill China's exports.

Would you rather hold paper with no value or several trillion dollars? I would rather hold the money. If US defaulted, they would gave several trillion and China would have no outside source to keep their currency stable. US value is already set by float and the cash held is already factored in the value of the dollar by world markets.

[F430murci]

It still amazes me the dollar is even at this level when the US is so broke and yet their spending continues. With GDP about 1/3rd of its debt, it has no way to repay and by continuing to print money to pay debt, means the world at large must be stupid to keep accepting it as the reserve currency. The continuing 'appreciation' of the currencies such as Baht, Won and Peso is simply the USD is getting weaker, nothing to do with their strength of local currencies. IMO USD should be around 22 Baht not 30.

---------------------------------------------------------

Printing money, QEs, is much more complicated than paying debt. More about shoring up world banking reserves and backlashes from CMO. QE money has actually landed in the holes that needed filing, much like water seeking the lowest point. Research how much of QE3 has ended up in foreign markets where the banking weaknesses remain. Hate to break it to you, Feds actions is actually keeping world banking afloat more than US at this point in the recovery process. Fed and US could gave just shored up US banking and let European and world banking fend for itself, but it didn't. Rather than read whack a doodle internet sites that comain about anything US, take an objective look at it. Gratitude toward US not being so selfish might be more warranted.

And no, . . . US is not even remotely close to defaulting and will never default on it's obligations. If it gets to that point, all other world finial systems including Thailand will have already failed.

No offense, but statements like yours are just parroting ridiculous political rhetoric that has very litlle to rivalry reality. The truth is, our currency keeps the world currency in check.

Do you realize, we could destabilize China in a matter if 30 days which would take Thailand and all SE Asia finacial with it. China's currency is way more manipulated that US and US keeps it from the Yuan from appreciating and imploding China's entire economy.

We hold so much Chinese currency to keep the Yuan from appreciating, we could stop their entire economy in 30 to 60 days. Default, keep their money and we have 5 trillion and they have hyper inflation and an absolute inability to sell their cheap crappy products at rock bottom low price. What do you think that would do to the Baht?

The US currency is actually the only stable currency.

Sadly you appear to be believe the media about the security of the US 'reserves'. This is not any personal dig against you - it is simply fact. China actually swapped a lot of US debt instruments recently (3 Trillion) for US gold. Now that was really smart because as the US was unable to service its debts, so by swapping US gold China actually made substantial gains (already) as well as removing paper that was worthless. Yes US could trade out but at present that is unlikely. US and China are unwilling bedfellows at present because Trade Goods are essential to the US economy or your pricing for domestic goods would skyrocket. Similarly if US defaults on more payments, China will have to accept the US delinquency because they have allowed US to run up the credit scores without any hope of settlement. So right now believe what you will but China is in surplus and US is in substantial debt (around USD60 trillion if you research it) - that kinda puts it all in perspective. Best wishes for your future.

Best wishes on my future? That's bizarre.

I will confess the wife is the expert here as she is an investment banker. I am a securities lawyer with a Series 7 and 66 though and hear much rumblings about such matters from my clients as well.

I have heard the Gold play us nit really logical for Bank of China and China could pretty much mine as much gold as they want, but material like palladium that have huge demand might yield returns needed.

The Peoples Bank of China, the central bank, has been hinting that it is purchasing. No asset is safe now, said the PBOCs Zhang Jianhua at the end of last month. The only choice to hedge risks is to hold hard currencygold. He also said it was smart strategy to buy on market dips. Analysts naturally jumped on his comment as proof that China, the worlds fifth-largest holder of the metal, is in the market for more.

There are a few problems with this conclusion. First, the Chinese government rarely benefits othersand hurts itselfby telegraphing its short-term investment strategies.

Second, the central bank has less purchasing power these days. Chinas foreign reserves declined in Q4 2011, falling $20.6 billion from Q3. The first quarterly outflow since 1998 was not large, but the trend was troubling. The reserves declined a stunning $92.7 billion in November and December.

Third, the purchase of gold would be especially risky for the central bank, which is already insolvent from a balance sheet point of view. The PBOC needs income-producing assets in order to meet its obligations on the debt incurred to buy foreign exchange, so the holding of gold only complicates its funding operations. This is not to say the bank never buys goldit obviously doesbut there are real constraints on its ability to purchase assets that do not provide current income.

[F430murci]

It still amazes me the dollar is even at this level when the US is so broke and yet their spending continues. With GDP about 1/3rd of its debt, it has no way to repay and by continuing to print money to pay debt, means the world at large must be stupid to keep accepting it as the reserve currency. The continuing 'appreciation' of the currencies such as Baht, Won and Peso is simply the USD is getting weaker, nothing to do with their strength of local currencies. IMO USD should be around 22 Baht not 30.

---------------------------------------------------------

Printing money, QEs, is much more complicated than paying debt. More about shoring up world banking reserves and backlashes from CMO. QE money has actually landed in the holes that needed filing, much like water seeking the lowest point. Research how much of QE3 has ended up in foreign markets where the banking weaknesses remain. Hate to break it to you, Feds actions is actually keeping world banking afloat more than US at this point in the recovery process. Fed and US could gave just shored up US banking and let European and world banking fend for itself, but it didn't. Rather than read whack a doodle internet sites that comain about anything US, take an objective look at it. Gratitude toward US not being so selfish might be more warranted.

And no, . . . US is not even remotely close to defaulting and will never default on it's obligations. If it gets to that point, all other world finial systems including Thailand will have already failed.

No offense, but statements like yours are just parroting ridiculous political rhetoric that has very litlle to rivalry reality. The truth is, our currency keeps the world currency in check.

Do you realize, we could destabilize China in a matter if 30 days which would take Thailand and all SE Asia finacial with it. China's currency is way more manipulated that US and US keeps it from the Yuan from appreciating and imploding China's entire economy.

We hold so much Chinese currency to keep the Yuan from appreciating, we could stop their entire economy in 30 to 60 days. Default, keep their money and we have 5 trillion and they have hyper inflation and an absolute inability to sell their cheap crappy products at rock bottom low price. What do you think that would do to the Baht?

The US currency is actually the only stable currency.

Sadly you appear to be believe the media about the security of the US 'reserves'. This is not any personal dig against you - it is simply fact. China actually swapped a lot of US debt instruments recently (3 Trillion) for US gold. Now that was really smart because as the US was unable to service its debts, so by swapping US gold China actually made substantial gains (already) as well as removing paper that was worthless. Yes US could trade out but at present that is unlikely. US and China are unwilling bedfellows at present because Trade Goods are essential to the US economy or your pricing for domestic goods would skyrocket. Similarly if US defaults on more payments, China will have to accept the US delinquency because they have allowed US to run up the credit scores without any hope of settlement. So right now believe what you will but China is in surplus and US is in substantial debt (around USD60 trillion if you research it) - that kinda puts it all in perspective. Best wishes for your future.

There has been a lot of pressure on China to stop manipulating Yuan and avoiding float to artificially make its labor and inferior products desireable.

World pressure, G20, US pressure and China's need to curb its own inflation has dictated China's reduction in the purchase of US treasuries, not credit rating issues.

In fact, Japan other countries' purchases of US Treasuries more than made up difference due to Euro worries. US still paying . . .

I was addressing the effects and purpose of QE. Most of this is actually ending up on foreign bank reserve balance sheets and was meant to assist in paying off bad CMO bonds. China was a huge holder of CMOs. US made good on those bonds even though in a free market, China should have just lost their money on these risky investments. US tax payers incurred the financial burden through guarantees by ginnie, freddie and fannie and then by using tax payer dollars to bail those out.

I am hearing from my investment banker wife that some $207 billion of QE3 have made it to foreign bank balance sheets in just a few weeks in January. This is the second highest surge of foreign balance sheets since the AIG bailout.

The Fed is quietly keeping the world banking system liquid and reserves in line.

Edited February 23, 2013 by F430murci

[ggold]

X

It still amazes me the dollar is even at this level when the US is so broke and yet their spending continues. With GDP about 1/3rd of its debt, it has no way to repay and by continuing to print money to pay debt, means the world at large must be stupid to keep accepting it as the reserve currency. The continuing 'appreciation' of the currencies such as Baht, Won and Peso is simply the USD is getting weaker, nothing to do with their strength of local currencies. IMO USD should be around 22 Baht not 30.

---------------------------------------------------------

Printing money, QEs, is much more complicated than paying debt. More about shoring up world banking reserves and backlashes from CMO. QE money has actually landed in the holes that needed filing, much like water seeking the lowest point. Research how much of QE3 has ended up in foreign markets where the banking weaknesses remain. Hate to break it to you, Feds actions is actually keeping world banking afloat more than US at this point in the recovery process. Fed and US could gave just shored up US banking and let European and world banking fend for itself, but it didn't. Rather than read whack a doodle internet sites that comain about anything US, take an objective look at it. Gratitude toward US not being so selfish might be more warranted.

And no, . . . US is not even remotely close to defaulting and will never default on it's obligations. If it gets to that point, all other world finial systems including Thailand will have already failed.

No offense, but statements like yours are just parroting ridiculous political rhetoric that has very litlle to rivalry reality. The truth is, our currency keeps the world currency in check.

Do you realize, we could destabilize China in a matter if 30 days which would take Thailand and all SE Asia finacial with it. China's currency is way more manipulated that US and US keeps it from the Yuan from appreciating and imploding China's entire economy.

We hold so much Chinese currency to keep the Yuan from appreciating, we could stop their entire economy in 30 to 60 days. Default, keep their money and we have 5 trillion and they have hyper inflation and an absolute inability to sell their cheap crappy products at rock bottom low price. What do you think that would do to the Baht?

The US currency is actually the only stable currency.And there I was thinking China could do the same to the US, they are holding quite a bit of US Debt are they not?

Not really. This is an over simplification, but the value of the Yuan is set internally by State counsel and not subject to float. The Yuan is very difficult to convert to other currencies and visa versa. Making the Yuan subject to float would result in a true valuation of the Yuan and kill China's exports.

Would you rather hold paper with no value or several trillion dollars? I would rather hold the money. If US defaulted, they would gave several trillion and China would have no outside source to keep their currency stable. US value is already set by float and the cash held is already factored in the value of the dollar by world markets.

I wasn't referring to the strength of the Yuan, only that China holds a fair amount of American debt, or they did do! If they decided to dump that debt on the market that would cause problems no? As for your last paragraph, I don't understand? If the US defaulted no one would get any money. As for holding paper or cash, I would rather hold gold!

[driedmango]

I think the USA never plans on paying China back... If the current communist government was to fall for another government, maybe by voting, would the USA claim the owe the CPP but not china ? Also all the assets of teh CPP in other countries, what would happen to them ?

Is a communist government a corporation under international law ? I have never got that one.

Edited February 25, 2013 by driedmango