I have seen a fair amount of chatter about currency regime shifts. Although such an event may be happening, there is no particular reason to get too excited about it from the perspective of the developed countries. The figure above shows foreign official holdings of Treasuries as a percentage of Federal Government Debt — using the Fed Flow of Funds (Z.1) report. We can see why there was a great deal of excitement about “China buying all the U.S. bonds!” going into the 2008 crisis, but we can also note that this series has moved around a lot over time (mainly the result of mercantilist policies of Asian countries). However, the downdraft in foreign reserve holdings over the past decade certainly did not result in a Treasury bear market.
Currency Regime Shift Effects Over-Rated
Currency Regime Shift Effects Over-Rated
Currency Regime Shift Effects Over-Rated
I have seen a fair amount of chatter about currency regime shifts. Although such an event may be happening, there is no particular reason to get too excited about it from the perspective of the developed countries. The figure above shows foreign official holdings of Treasuries as a percentage of Federal Government Debt — using the Fed Flow of Funds (Z.1) report. We can see why there was a great deal of excitement about “China buying all the U.S. bonds!” going into the 2008 crisis, but we can also note that this series has moved around a lot over time (mainly the result of mercantilist policies of Asian countries). However, the downdraft in foreign reserve holdings over the past decade certainly did not result in a Treasury bear market.