Re: [Pen-l] Why is the U.S. dollar regarded as a safe haven.

[Laurence Shute <lshute@xxxxxxxxxxxxx>]

ken hanly wrote:
> But then isn't the Japanese Yen appreciating vis a vis the US dollar? It is not third world but developed world currencies that are really being hit such as Australia, New Zealand, and Canada as well as European countries and also Iceland the best place in the world to live according to a UN survey.

I thought so too, but last night, on the Bill Moyers program, James 
Galbraith argued:

> BILL MOYERS: What are the negative effects of a soaring deficit?
>
> JAMES GALBRAITH: Well, the one thing I would have worried about is that we might not find lenders who are willing to provide funds to the U.S. government, that the Chinese or the Japanese might decide that they would rather be in some other currency and that we'd then have trouble with inflation. But that's not going to happen.
>
> It's not going to happen because, as it turns out, the major alternative, the euro, simply isn't viable as a reserve asset for the rest of the world. It's the dollar or nothing. So the United States basically can finance itself to the extent necessary to deal with this crisis. And I'm right now quite sanguine about that, quite confident that we won't face a problem.
So, what to make of this?

Larry Shute
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