the question is this: has the percentage of foreign exchange reserves going into dollars declined and by how much?
this piece does not answer that question.

I thought so.

This too will stop in a NY nano-second if the Fed cuts one more percentage point from the current 2.5% to 1.5% points you can then turn out the lights at the (G7-8-9-10?) because the support factor (greed) pay back will be over and gone! You think! If the fed cuts a .5% point later this month the dollar will fall below .70 cents on the dollar and the interest on bank debt returns now running at the avg. of 20% will evaporate like water in the desert… of the credit owner of debt!
The OZ

just a matter of time… more BS & propaganda.. and I am a Republican.

I’m curious, the Feds holding their money. In yester-yore, on the gold std, accts between nationals used to be adjusted by shifting gold bars from, e.g. the American room to the e.g. French room. It was only when they showed up and said, “gimme,” that we reneged. The point is, if all these holdings are demand deposits, or swaps, or whatever, they can be moved out of dollars on a dime. And everything written above turns true in that “nano-NY”!

You got it Kid… good job, looks like you’ve done your home work! It’s just one of the shell games of yester-yore, I give u dollars and you short the dollar up up and away to Gold, then when it reaches pay back time you give me gold and I’ll trade for dollars… wow what a world we live in?

The question raised previously (1st post) of “has the percentage of reserves going into the dollar declined and by how much?” gets to the heart of the issue.

It is well known that Asian countries have been meeting over the past year to discuss increasing investment in Asia. The U.S. was not invited. The question of whether any country is “dumping” dollars also looks at only one portion of the potential problem. Current investments in dollars will not likely be “dumped”, due largely to the negative impact on the investor, in this case, foreign central banks. However, “new” flows of reserves could be “redirected” to other currencies, considered safer than the dollar. Also, as the first post alluded to, “new reserves” could be allocated in some proportion, with the dollar continuing to receive some amount.

Determining the potential outcome of a situation such as with the dollar only requires: (1) facing the facts: (2) putting yourself in the shoes of the foreign central banks. Why would you continue to invest your country’s “hard-earned” reserves in a currency which will be weak for several years to come due to the need to keep interest rates low (because of the huge federal debt burden)? How will you “make up” the currency losses which you can clearly expect going forward? How did you explain the losses to date? How can you invest your reserves in the currency of a country which has steadily rising inflation? Do you discard your intelligence and try hard to “believe” that “core inflation” means something and there’s not really an inflation problem?

All the evidence points toward the dollar losing its stature as the “world’s reserve currency”. It would appear prudent for Treasury and Fed officials to begin some preparation for such a world. It won’t be long!

Phil,

thanks for the blog…

the bottomline…they aren’t dumping dollars but they may not be buying them either…

Declining jobs (especially well paying ones and manufacturing), shrinking incomes, negitive savings rate, rising costs (especially food and energy), crumbling infrastructure, high crime rate, failing education, failed health care, failing Social Security and medicare. If I was a Foreign central banker there’s no way in hell that I’d trust the bankrupt USA!

it seems to me Win Thin is missing the point here: asian banks are receiving truckloads of dollars for their positive trade balance with the u.s. some of this money stays in dollars to purchase commodities and for other irrational reasons, and some is converted in safer currencies that are not being depreciated so fast. for all this, yes the mass of dollars held by asians increases but by a lower rate than the supply of dollars by the u.s. government. so Win Thin has fallen into a fallacy trap drawing irrelevant clonclusion from his premises.

I don’t think it is possible for Asian and Arab countries to dump the dollar. It is too far-fetched of a scenario.

I agree with bb.
Win Thin is showing us half the picture. There is what is seen and what is not seen ie the half hiding behind the curtain.
If the $US goes into free fall no Central Bank on earth will hold their $USs out of loyalty.

Its hard to comprehend that the official US government position is ” We are for a strong dollar” when the tsunami of forces is diametrically opposing that statement.

Lets think about this. Asian countries are raking in dollars due to their positive trade balance. If they sell dolars and buy lets say the British Pound then the dollar would continue to fall. This is not good for Asia because their goods would become more expensive for the US Consumer. This would in turn cause a slow down in the Asian Economy. Asian countries must continue to invest dollars in the US and hope that this credit crunch and recession will end sooner than later. I think that Big Ben has everything under control. He has trumped the gloom and doomers.

The problem, Chuck, is that eventually the Fed (and all of those people involved with bad loans) have to pay the piper.
Yes, foreign markets want to protect their investment and don’t want to see a meltdown of the greenback but internal forces and the printing of money by the Fed will be crippling.

As we’ve seen by the 90’s Japan, you need the markets to correct, the Feds have no hope to create a soft landing for the TRILLIONS tied up in bad investments.

The BAD news is that this is an election year, and the politician with the best strategy (bail out for this mess) will get elected, when they sould be focused in reeling in the Wall Street GREED, that they helped create with bad policy and appearently ZERO oversite.

No they aren’t dumping Dollars exactly - they’re “packaging and re-packaging them” instead.
Our currency is, frankly,
sub-prime due specifically to
the Greenspan/Bernacke Fed. It will take genuine reversal
of the talk is cheap strong dollar policy before I regain any religion about the Greenback

US dollar Supported by soaring US inflation, oil prices, resulted inflationary recession, will be followed by
agressive rate hikes in inflation fighting later this year.

www.osawh.com/currency.html

the irrational motives that make asian countries accumulate dollars are much more relevant to theose countries’ governments than optimization of profits. for example in china and japan kreating employment is far more important than realizing optimal profits on the already accumulated dollars.

BTW ex-Apostle, I added to my short currency position by selling the SF Tues AM and covered my SF and Euro shorts later the same day. I shorted the SF once again Friday for a profitable day trade. All you folks can talk trash about our US dollar, but in my view it’s going to be a far better store of value than its major fiat competitors over the next few years.

Wilson - If we talking about a one week currency futures trade then my hat is off to you. You covered your short positions because, I presume, you saw renewed weakening of the Dollar by week’s end. It gives me no enjoyment whatsoever to “trash the dollar”; I don’t know if you stay awake in the wee hours around here as Europe begins to open but I for one won’t go to sleep at that time if I have any long dollar exposure. As for the stuff that I own outright I’ll take
my chances, which I believe are safer ones, by keeping far away from Dollar exposure unless and until, as I have stated, there is a fundamental change in the direction and practice of U.S. monetary policy, namely curtailing the printing of ever more dollars. BTW - most of the Euros I hold outright were obtained at 103, 108, and 117. That’s not likely to change just because the Euro may be overtendended on a techical trading basis. I just don’t want to wake up here in the U.S. to news that the Dollar began seriously “tipping” overnight resulting in a loss that I can’t live with, as opposed to a the slight erosion of those positions in a particular week like the one that just brought you your well earned profit.

Apostle, I certainly would have agreed with you and been on the same side of the trade when you were buying Euros at $1.03. And, yes, I would be foolish shorting the euro now without understanding that the interest rate differential favors it. I do not generally hold currency positions very long as these markets follow a stochastic process in the short run; what they give you can very quickly be taken back. All that said, my bias now is to trade the US dollar from the long side. There has been a sea change in the world economy and the US consumer can no longer be counted upon to subsidize the rest of the world. The euro is more vulnerable than the dollar under these new conditions. The dunderheads at the ECB are still fighting the last war.

Asian foreign reserves are in the Trillions, not Billions. China and Japan alone have over $2.6T in foreign reserves. About 2/3 of these reserves are held in $US.
Not sure where $211B came from.

With lies on snipers pinning her down…coupled with a woman whose baby “died” and a NAFTA Columbian “deal” in a dark, chief-strategist, for her…And Obama doing the same with NAFTA Canada…And John McCain’s Arizona on the Foreclosure National Hit Parade and no idea of anything except being 71 and getting something, like Mexican traffic, through….Because pot is distributed nation-wide, and is illegal, like Al Capone likes…….
Cease contributing to a two-party Corrupted Political Cartel. By not donating your money to them…Bring these anti-human thieves… to nothing. They are lies.

Where is my little buddie… of the “GOLD and Soy” futures…? I hope you did your home work last week and you are ready to… “Short ($) (shoot) the moon here?” it is on the cusp of decesion time… drive it like you stole it and you will!

Look to (”JUNE”) everythings in full “BLOOM”!

Hey dude I called the Ball but you were no where to be found! I had to leave Soy on your back porch, hope u got out in time! Go Gold…!

I’m new and don’t understand what’s going on with gold dropping like everything else and the slowly going back up. Help