[quote=Fearful][quote=kewp]
In any event, it is hard for me to imagine Fed and Treasury not intervening to weaken the dollar to ward off deflation. Right now things look awfully deflationary.
Problem is, if the Chinese, or any other net accumulators of dollar reserves, develop any bias away from the dollar, there would be a rapid devaluation. Fed and Treasury might not be able to intervene fast enough to stop the dollar from crashing.[/quote]
Fearful, thanks for the post. May I pick your brains a little further? Presumably it’s the Asian reserves that are the lion’s share, that would ultimately be the cause of a dollar collapse. But we are led to believe that the symbiosis between the US and Chinese economies make this unlikely? A crashing dollar sounds like a severe loss of value, but I guess that means basically it becomes unstable against a basket of currencies and can undulate, and whichever way it goes it’s bad right?
