Monday, February 23, 2009
Why the dollar will stay strong for now
"...although the Chinese could cause serious problems for the US by refusing to lend it any more money, that’s unlikely to happen right now. The Chinese don’t want to spark a run on the dollar, as that would wreck the value of their own dollar holdings. But at the same time, there’s always the risk that by printing lots more money, the US will simply try to inflate its way out of its debts. That wouldn’t be good for China either. So it’s understandable that Beijing is looking for reassurances that if it keeps buying US debt, it’ll eventually be repaid in money that’s actually worth something."