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Hijacking my own comment. There're rumors that the current shortage of cash is because people in Europe are borrowing massive amount of ultra low rate loans (n
by ww520 7y ago
Hijacking my own comment. There're rumors that the current shortage of cash is because people in Europe are borrowing massive amount of ultra low rate loans (negative yield) in Europe and turn around to buy U.S. treasuries (higher yield) to do currency carry trade to profit on the yield difference. To buy the treasury bonds, they have to use U.S. dollars so they are soaking up all the excessive dollars out there with their borrowed euros.
- dia80 7y agoI don't think this is true. I trade cross currency basis and if there was excess demand for offshore USD the "basis" (premium over normal rates to borrow USD in return for lending e.g. EUR ) would be moving dramatically. It changed a bit today in response to USD shortage but this seems predominantly a domestic story.
- shitgoose 7y agogovernment can borrow at negative rates. i doubt that yooropean joe blow can do that.