A recent talking point re-emerges in another light....

[David Morris]

TT is correct.  The dollar's size, and the fact that it is stand-alone
(its value can be adjusted from within - by the Fed) make it so
durable and reliable.

On Wed, Jan 25, 2012 at 7:33 PM, Technopaegnion Tapinosis
<technopaegniontapinosis at gmail.com> wrote:
> Not really. The independence of the Fed has little to do with governments
> buying dollars during crises. In fact, it's not a consideration at all for
> most buyers of dollars. The dollar, as you note here, is a haven in
> difficult or uncertain economic periods (short or long) because, as you also
> note, it has an excellent history. But it is the dollars very special
> function as the currency of the world, its liquidity, its size as a
> currency, and the size the markets that trade in dollars, that make the
> dollar the currency the world turns to, bit only in times of trouble and
> undertainty, but all the time. Two nations that do little business with the
> USA, and who hold few secutities in dollars, will still hold and trade in
> dollars. It's not the Fed or anything political that motivates this, but the
> fact that it is in the dollar, as it is in English, that  business gets done
> in the world. The political play, say the surrent S&P move into the
> assessment of political risks, is a trend that may undermine the dollar in
> time, so the perception of an independent Fed seems, these days, important,
> but it matters almost not at all.