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TORONTO - The American dollar kept falling Friday, notching fresh multi-month lows against the loonie, euro and pound over concerns that the massive U.S. deficit may drag down the country's credit rating. BMO Capital Markets deputy chief economist Doug Porter said the sudden intense focus on the U.S. credit rating - following a warning that Britain's rating is in doubt because of its government's heavy debt - has driven the greenback to its low for the year "As well, the dollar is also rapidly losing its safe-haven appeal, as global credit markets continue to gradually heal, and investors become ever more confident that the worst case scenario for the global economy has been averted," Porter wrote in a note to clients.
Major holders of U.S. debt, such as Middle Eastern sovereign funds and the Chinese government, have not been shy about calling the United States out for what it sees as policies that will trigger inflation, shrinking the value of their U.S. Treasury holdings. The Fed in March said it planned to buy up billions in long-term Treasurys and $1.25 trillion in mortgage-backed securities, flooding the money supply. Earlier this month, the Obama administration hiked its forecast for this year's federal deficit to $1.84 trillion. The deficit is approaching $1 trillion for the budget year that began Oct. 1.
Originally posted by Zosynspiracy
Have you guys ever thought that massive US inflation might be ruinous for our country economically but would also keep China in check and destroy much of their wealth? I don't think the US government has our best interests in mind but they are a lot smarter than we think sometimes. The economy is a very powerful tool and with countries heavily invested in the dollar their ability to manipulate it gives them a lot of control over other countries. Besides what other option does China have? Sell off all their treasury bonds and do what?
Originally posted by Zosynspiracy
Have you guys ever thought that massive US inflation might be ruinous for our country economically but would also keep China in check and destroy much of their wealth?
I don't think the US government has our best interests in mind but they are a lot smarter than we think sometimes.
The economy is a very powerful tool and with countries heavily invested in the dollar their ability to manipulate it gives them a lot of control over other countries.
Besides what other option does China have? Sell off all their treasury bonds and do what?