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Subject:  Re: “The End of Dollar Hegemony” Date:  2/20/2006  6:33 PM
Author:  jackcrow Number:  15476 of 36325

For many that is the burning question. Big bond players are suppose to be the "smart money". The debt market is often described as the dog wagging the equity market tail.

One theory that is kicked around is that in many ways the USD is rooted deeply into the international economic system. It can't simply be plucked out and quickly replaced. How old is the Euro? How much trust does the interanational scene have in their central bank management, currency management, interest rate management. How much faith does the internatinal scene have in the economy of the EU? The EU being purely an economic confederation is far messier then even our situtation.

What is the replacement?

Throw in the resiliance of the current slow, crabbing economic situation and it imparts faith that the US can still back up its Dollar and its debt.

US debt more then the USD(although heavily related) is the much of the grease on the international wheels. The current lesser of evils.<shrug>

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