FINANCIAL TIMES:
The world's central banks were net sellers of US assets in March for the first time since September 2002, according to figures that may hint that the recent rebound in the dollar will be temporary.
Central banks sold a net $14.4bn in US assets during the month, the largest sale since August 1998, the US Treasury revealed. Asian central banks, however, continued to accumulate reserves, with their stockpiles rising by about $30bn over the month.
“For those central banks that are not managing their currencies, there may well be a feeling that the dollar is not a great bet,” said Adam Cole, currency strategist at RBC Capital Markets
Economists says these sales may be a sign that central bank officials fear the dollar downtrend will at some point resume. The most conspicuous sale was by the Central Bank of Norway, which sold $17bn of US Treasuries.
Private-sector inflows into the US remained robust in March at $74.5bn, only slightly down from $79.4bn in February.
“It does seem that when private sector investors are willing to buy dollars, the central banks are happy for any excuse to offload part of the mountain of dollars they have accumulated,” said David Bloom, currency strategist at HSBC.... [*]
Private investors in the dollar are betting the US will raise interest rates, and make the dollar's risk worthwhile. That's interesting because domestic investors are betting the Fed will cease raising interest rates to protect the the real estate market [*].
That's because if the Fed keeps raising interest rates the housing and car markets will tank and the economy will crash. On the other hand, if the Fed DOESN'T raise interest rates, private investors will bail out of the dollar markets, and the dollar will crash. Gas prices will double, and so will imported products (almost everything). THEN the economy will crash.
So there you have it, there's a crash ahead, and BushCo has painted us into a corner we can't escape.