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It's worse than that. Soros is saying that "cheap money" in the US has been caused by a ponzi-scheme in US asset markets. Capital inflows pushed up prices and
by trevelyan 19y ago
It's worse than that.
Soros is saying that "cheap money" in the US has been caused by a ponzi-scheme in US asset markets. Capital inflows pushed up prices and attracted more investment, which pushed up prices and attracted more investment... Now that people are taking money out prices will fall and obliterate a lot of wealth that exists only on paper.
There's no question that what he's describing has happened. The real uncertainty is over the scale. This could be very significant, or it could be insignificant. Soros is implying that this sort of speculative investment dominates US markets and is the reason the USD hasn't followed fundamentals for the last ten years.
Not much mention of this in the news, but Hong Kong and Singapore have just adjusted their basket peg to the USD. Reduced demand for USD by major debt-holders means reduced demand for USD assets.
- wallflower 19y agoAlso China has hinted at using its $900bn in US Treasuries as political ammunition
- yummyfajitas 19y agoUnlikely. Debt we owe china is leverage we have over them. If they tried to use it for political purposes, all we need to do is say "we're not paying." For bonus points, we can also say "100% tariffs on chinese goods." All of a sudden, $900 billion of China's assets are toast. This will hurt their credit rating as much as ours (do they have any collateral anymore?). Debt between nations is not the same as debt you owe to the bank.