Reply #4: Dollar buying stops? [View All]

[rapier]

Dealer estimate that Japan's Ministry of Finance bought $5 billion on Monday and $2.5 billion Tuesday. That would be bought dollars. They have said they are willing to spend hundreds of billions this year.

I just read an estimate that total central bank dollar buying Monday and Tuesday was $20. Yes the dollar contiued to fall but that buying is just creating more liquidity. Most of which stays inside the financial system so round and round and UP we go.

Yes it is insane. No matter. It's music to Greenspans and everyone elses ears.


I will admit that something could happen to throw us into some sort of panic. I say again however that every panic, every accident ends up being a panic to the upside as unlimited liquidity floods the world.


Thre is a liquidity seize up of sorts going on in that the broad money supply is shrinking as money is abondoning the money market. Yet short term rates remain pegged at the bottom. There is no outward sign in the markets of any liquidity problems. Spreads up and down the credit market from the worst junk to agencies and short term bills still are falling.

It is so important to understand that the liquidity created over these past few years is so gigantic, so stupendous that it defies comprehension and to a large extent analysis. That liquidity, and the willingness of governments to print over ANY problem says the predicting the end is impossible.

In our erstwile democracies the citizens don't understand nor care for the most part and those who do are the most powerless of all. This is a war and the beneficiaries now own the governments in a very real sense. Governments now are the market. It's a new kind of socialism. Capitalism is defeated. Markets now by fiat go only up. Nobody much liked that old up and down of the bussiness cycle, which was really the credit cycle.