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This theory assumes that the deposits stay in accounts in the US and that foreign countries are buying US government backed securities. While the money we pay for our Lotus' will go to the dealer, and then to Lotus USA, and then to Lotus UK, and then to Proton, it will eventually wind up in Malaysia. Although in between it stays in the US banking system artifically inflating the numbers for a while. It is foolish to think that the money will always be in the US.

I believe that England and Canadian based corporations used to be or are the largest owners of outside corporations or US based securities, and not many people knew it since they have American sounding names.

When the US treasury security yields drop, foreign investors invest outside of the US if they are looking for higher interest rate returns. Then if they can figure out when the bottom has hit, they convert their foreign currency into US dollar investments and wait for the dollar to go up. The stock market goes up when interest rates drop because people are willing to gamble to get a higher return. But then we all got burned a few years ago with Enron and Worldcom, so a lot more people want to play it safe.

I am not sure what interest rates are in other countries, but I know that when people were complaining about getting 4 and 5 percent on CDs here, banks in Japan were paying about .5% or less. Now the US has bottomed out and the Fed may increase rates at the end of the year. This will cause more foreign money to go into US securities, and in turn increase the value of the dollar.

Did Mosler move to England? I thought he was living in So Florida on Singer or Jupiter Island. At least his car factory is still in town.
 

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Yeah, that article seemed to only take into account part of the equasion.

It's the norm for companies to have most of their "cash" in market accounts (including Treasury funds). A good fiscal policy for a comapny will only hold a very small percent of their cash as actual cash, if any at all. Very good accounting departments will have all of their cash into short term financial notes and the bank converts them into real cash on an as needed basis. It's a good way to play the float and make a little bit of money on money in transit.

But yeah, a company in Country X is going to eventually need that money in Country X, not here in the US.
 

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Discussion Starter #5
xxxotic said:
Did Mosler move to England? I thought he was living in So Florida on Singer or Jupiter Island. At least his car factory is still in town.
Last I heard (a couple years ago) he was living in SoCal. Mosler Automotive is still in Riviera Beach, but he doesn't run it. I think the Cambrige title is likely either honorary or a part-time thing.
 
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