Comments on: Commercial Paper Market Could Lose US$500B by Thanksgiving http://www.dailyreckoning.com.au/commercial-paper-market/2007/09/25/ An independent perspective on the Australian and global investment markets Sat, 21 Nov 2009 10:39:45 -0600 http://wordpress.org/?v=2.8 hourly 1 By: Coffee Addict http://www.dailyreckoning.com.au/commercial-paper-market/2007/09/25/comment-page-1/#comment-3366 Coffee Addict Tue, 25 Sep 2007 02:38:40 +0000 http://www.dailyreckoning.com.au/commercial-paper-market/2007/09/25/#comment-3366 Eric I agree. May I add the following. The Federal Reserve is well aware that the US dollar will continue to tumble and with it the true value of US debt which is of course is mostly denominated in $US. This is akin to a "slight of hand" card trick in a high stakes game. The other players will NOT be impressed and the impact will be global. The Federal Reserve is also aware that a higher inflation rate can be the debtors friend. The true value of the debts simply gets eaten away. This is particularly the case for residential real estate markets where nominal values tend to be downward inelastic. Eric

I agree. May I add the following.

The Federal Reserve is well aware that the US dollar will continue to tumble and with it the true value of US debt which is of course is mostly denominated in $US. This is akin to a "slight of hand" card trick in a high stakes game. The other players will NOT be impressed and the impact will be global.

The Federal Reserve is also aware that a higher inflation rate can be the debtors friend. The true value of the debts simply gets eaten away. This is particularly the case for residential real estate markets where nominal values tend to be downward inelastic.

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