How to dump dollar reserves without raising alarm?

[LargoWinch]

I found the following piece an interesting read.

The obvious question is, who do you sell it to?

TUESDAY, JULY 14, 2009
By RANDALL W. FORSYTH, BARRON'S

THE WORLD'S MAJOR GOVERNMENTS are getting edgier about having their assets mainly in dollars. But they're caught in a conundrum: They're damned if they dump their dollar holdings and damned if they continue to add to them.

One solution: instead of reducing dollar assets, why not issue dollar liabilities? If you're worried about the U.S. currency losing value and its special status, those debts would get paid off in cheaper dollars.

...

Full Article Here.

[blazespinnaker]

Re: How to dump dollar reserves without raising alarm?

Great article!

I don't think the US is as unhappy as you might think about the dollar losing value, though.

[cobben]

Re: How to dump dollar reserves without raising alarm?

"why not issue dollar liabilities"

The Swedish debt office (= Treasury) did that last year.

[GRG55]

Re: How to dump dollar reserves without raising alarm?

I found the following piece an interesting read.

The obvious question is, who do you sell it to?

Another month of net outflows according to the TIC data released this morning:

International Demand for Long-Term U.S. Assets Declined in May



July 16 (Bloomberg) -- International demand for long-term U.S. financial assets fell in May, as Russia, Japan and Caribbean banking centers trimmed their holdings even as China stepped up its purchases.

Total net sales of long-term equities, notes and bonds were a net $19.8 billion in May, compared with buying of $11.5 billion the month before, the Treasury said today in Washington. Monthly foreign investment flows dropped $66.6 billion in May, compared with a decline of $38 billion in April...

[Kadriana]

Re: How to dump dollar reserves without raising alarm?

Another month of net outflows according to the TIC data released this morning:

International Demand for Long-Term U.S. Assets Declined in May



July 16 (Bloomberg) -- International demand for long-term U.S. financial assets fell in May, as Russia, Japan and Caribbean banking centers trimmed their holdings even as China stepped up its purchases.

Total net sales of long-term equities, notes and bonds were a net $19.8 billion in May, compared with buying of $11.5 billion the month before, the Treasury said today in Washington. Monthly foreign investment flows dropped $66.6 billion in May, compared with a decline of $38 billion in April...

So is it basically the US government buying its own bonds now?

[c1ue]

Re: How to dump dollar reserves without raising alarm?

So is it basically the US government buying its own bonds now?

There is a lot of anecdotal evidence that the big (US) dealers are the ones taking up the slack in Treasury buying. This is quite easy to do since they are also the ones that have been (and continue) to receive huge sums of cash from the Fed and Treasury.

The question again is when this dynamic will either break because the economy (US and world) improves such that this type of blatant reality masking can be quietly removed or because the circular flow from Fed to dealers to Treasury becomes so outrageous that truly bad effects become felt by the dollar and/or US economy.