Read the Bills Act Coalition

Monday, December 21, 2009

Shanghai Daily - Harder to buy US Treasuries

From the Shanghai Daily:

IT is getting harder for governments to buy United States Treasuries because the US's shrinking current-account gap is reducing supply of dollars overseas, a Chinese central bank official said yesterday....The comments by Zhu Min, deputy governor of the People's Bank of China, referred to the overall situation globally, not specifically to China, the biggest foreign holder of US government bonds....Chinese officials generally are very careful about commenting on the dollar and Treasuries, given that so much of its US$2.3 trillion reserves are tied to their value, and markets always watch any such comments closely for signs of any shift in how it manages its assets....China's State Administration of Foreign Exchange reaffirmed this month that the dollar stands secure as the anchor of the currency reserves it manages, even as the country seeks to diversify its investments....In a discussion on the global role of the dollar, Zhu told an academic audience that it was inevitable that the dollar would continue to fall in value because Washington continued to issue more Treasuries to finance its deficit spending....He then addressed where demand for that debt would come from...."The United States cannot force foreign governments to increase their holdings of Treasuries," Zhu said, according to an audio recording of his remarks. "Double the holdings? It is definitely impossible."

Read Here:

1 comment:

Hal (GT) said...

This is one of the big reasons I see gold and silver as being a safe haven asset right now. Even though the last couple of weeks have been hard on the metals they still are way above where many thought they would ever go. And if China gets that the US can’t continue on this reckless deficit spending you know things are looking bad. I saw too, that China’s consumption of gold in 2009 out paced their creation. Plus Russia now is getting into buying more of the metal too.

Looking at the widget ExactPrice right now gold and silver are trading at $1,092.70 and $17.06 an ounce. Down for the day but come 2010 I’m really going to keep an eye on it.