Central banks shift reserves away from US - Central banks are shifting reserves away from the US and towards the eurozone in a move that looks set to deepen the Bush administration's difficulties in financing its ballooning current account deficit.
Surfer Wrote the following on 01/25/2005 02:38 AM : For the joy of theoretical discussion....
Let's assume for a moment that this continues to happen. This should, if Iam correct, continue to weaken the dollar, yes?
Now, how does a government in debt so deep that it can't even remember what daylight looked like handle this when the US dollar tanks?
Well, there's a couple ways....
First, it's possible that someone might suggest that all the loans that our government has made to other countries and organizations are due in full, immediately. Well...how much has the US loaned out? More than the countries can pay back in any reasonable time. This, if I'm not mistaken, should finish the job of destroying the value of the dollar.
Second (and the next step of the above point), how do you fix a worthless currency? Issue new money, another kind perhaps and recall all the old? NOt for an even exchange, I'm sure.