As foreigners tire of American assets, demand for the dollar ebbs.
Under the policies, the Federal Reserve has purchased large volumes of financial assets, and the increase in demand for these assets from the Fed has lowered long-term interest rates and put upward pressure on the prices of stocks and bonds.
Moreover, if the demand for euro assets then rose faster than their supply, the euro would continue to appreciate.
This suggests fresh flight-to-safety buying by investors (including into gold), which will pull way demand for risk assets like stocks.
FORBES: P.M. Kitco Metals Roundup: Gold Ends Up on Fresh Safe-Haven Demand, Short Covering
An entrepreneur makes predictions through three basic projections: future revenues, future operating costs, and assets needed to service future demand.
FORBES: The Only Three Reasons Entrepreneurs Need Accounting and Finance
But large and persistent surpluses in countries like China mean continued demand for American assets, reducing the need for fiscal adjustment by either country.
Where, he asks, would the excess demand for global assets go?
Strong demand for safe assets could produce an attractive return for firms that have excess cash to lend out, particularly if low interest rates persist.
Demand for US assets, especially Treasuries, has been waning since the beginning of 2011, with central banks around the world increasing reserve accumulation while dumping the greenback.
FORBES: Central Banks Dump Treasuries As Dollar's Reserve Currency Status Fades
But this increased demand for core assets from financial institutions and sovereign-wealth funds buying into real estate for the first time has driven up prices and driven down yields.
The consequence of plummeting exports and capital inflows is that the Chinese will turn inward and focus on using all of their resources, including their massive stock of international assets, to boost domestic demand.
"From Florida to Seattle, Washington, from Hawaii to New York, all over California and many, many states across the country, people will be taking to the streets over the next week to demand that the assets of BP be seized now, " said Richard Becker, a member of the San Francisco chapter of the group.
Selling foreign reserves means the PBoC is raising demand for yuan denominated assets, fueling yuan strength.
FORBES: China Waking Up? Central Bank Now Selling Forex Reserves To Support Yuan
Much of the yen reaction responds to speculation that this money will be reeled in, while foreign assets will be dumped and yen demand will surge.
FORBES: Yen Intervention: Japan Waits For G7 Blessing In Late Conference Call
In theory, if private demand for new euro assets matched the supply from governments and firms that will borrow in euros, there might be no effect at all.
It sketched out a bleak scenario in which, for example, a rise in the price investors demand for holding risky assets in capital markets could make it harder and more expensive for companies and households to borrow.
The yield on the note has fallen over the last month as demand for less risky assets increased following the crisis in Cyprus and signs of a slowdown in the U.S. The yield was as high as 2.06 percent on March 11.
As correlation with U.S. equities and risk assets fall in tandem with stronger demand, particularly ahead of the Chinese Lunar New Years, gold could be moving toward the safe haven side, positioning the metal well ahead of market volatility and political risk.
FORBES: Two-Faced Gold: Trying To Move From Risk Asset To Safe Haven
Despite strong demand for higher-yielding assets, there are limits to what investors will pay.
China's desire to slow the rate at which it builds reserves may slacken demand for euro-denominated assets.
ECONOMIST: Capital and companies from China are sidling into Europe
Faced with strong external demand for AAA-rated assets, the financial system got creative.
However, the benchmark rate has fallen from a high of 2.06 percent reached March 11 as demand for low-risk assets increases.
Still, with the U.S. stock indexes rallying and the DJIA setting new all-time highs last week, such continues to curtail investment demand for safe-haven assets like gold.
Banks may not have enough safe assets of their own to satisfy widespread demand from asset managers, pension funds and the like, so they may seek to broker deals with others.
Apart from a rise in demand for jewellery, the rise in the price of gold may, at the margin, reflect demand for real, hard assets, as opposed to the paper sort.
He reckons the world does not have to become a lot more scary, to see a very large increase in demand for "safe" assets like gilts - and a correspondingly sharp decline in the interest rate which the government needs to pay.
Another major bearish factor for the gold and silver markets in recent weeks has been rallying stock markets worldwide, which shows investor risk appetite is on the upswing at the expense of demand for safe-haven assets like gold and to a lesser degree silver.
If a region, like California or France, however blessed with beauty, culture, ecosystem, and climate, becomes too rapacious in its taxation and too intrusive in its regulation, people will leave, particularly successful people who are in demand many places and whose assets are more portable.
FORBES: In California, They're Roasting Goose For Christmas This Year
In particular, the banks would demand to collateralize all of the assets.
FORBES: The Entrepreneurship Vacuum in Japan: Why It Matters and How to Address It
应用推荐