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Posts by "macrosam"
189 Posts Total by "macrosam":
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Posts by Anonymous "macrosam":
EUR/JPY longs until austerity results in negative growth and increased deficits.
- tight fiscal policy, which results in less Euros being spent into the economies, promoting deflationary domestic conditions.
- Fed USD swap lines buy institutions time to borrow USD to cover USD losses at an inexpensive cost rather than having to sell EUR to obtain USD
- higher price of crude makes USD more obtainable by non-US sectors (can obtain USD from oil exporters rather than having to obtain them via trade with the US)
The reasons why I would expect a Euro decline:
- political uncertainty
- Dollar losses don't recover
I suspect the reasons for decline will continue to be kicked down the road although I'm not certain what the time frame is for some nations that seem to be overlooked like Belgium. Any Euro member withdrawal would reduce the operational demand base for the currency.
Much as Sting Theory was rejected decades ago as nonsense (to the point now it has evolved to M Theory), we are realizing the shortcomings of Neo Classicals, Monetarists, Austrians as their theories in their inception seem to all have failed to understand how a fiat money system differs from a commodity based one.