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To: JFK_Lib

Very confusing analogy, I do not know how this relates to the subject in a clear way.


18 posted on 01/24/2005 10:20:16 AM PST by jveritas
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To: jveritas

The amount of credit the US government creates by selling bonds is an integral force, as are our trade deficit and the amount of total debt in our economy (gov and private).

If we oversupply US$ to drive government spending, then we will see the US$ go down in value.

In moderation this can be a good thing as it makes our exports more sellable and is part of a sort of self-correcting system of trade deficits causing devaluation which kicks up exports.

But it can also cause a panic if the deficits continue over a long time. If a panic is created, then the dollar collapses in value as people sell it for anything they can get and salvage some of their wealth that is held in US$.

The demand on the US$ is like the temperature of the pot in that it is delayed over time, following the rise and fall of US$ supplies.


20 posted on 01/24/2005 10:29:35 AM PST by JFK_Lib
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