To repay the fund, the central bank has kept the economy starved of foreign exchange and printed dollops of money stoking inflation.
ECONOMIST: Lack of foreign exchange is making life unbearable
If the Fed chooses to reduce the real burden of the debt via inflation, the purchasing power of money will fall along with the foreign exchange value of the dollar, and those who trusted in U.S. public debt will suffer.
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But as an alternative, Mr Smithers points out, it can still target the exchange rate the foreign price of money.
And how long will Asian countries continue to spend money building up foreign-exchange reserves that earn next to nothing and carry the risk of currency losses, rather than use the money to invest in their own region, which seems set to grow an awful lot in coming years.
Spotting yet another opportunity, he soon started a small foreign exchange business, which brought in a substantial amount of money.
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The government would lose money on its huge stash of foreign-exchange reserves but that loss will occur whenever the yuan appreciates and will be bigger the longer today's system continues.
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But she has given her backing to the most notable pillar of Mr Menem's past economic success, Argentina's unusual monetary system which pegs the peso to the dollar, and money supply to the level of foreign-exchange reserves.
What would have been the impact on commodity prices and the foreign exchange value of the dollar if the Fed had increased the money supply by a factor of eight (rather than a factor of three) in a bit more than four years?
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If people quickly pulled their money out of China, it could send foreign exchange markets haywire.
If a central bank buys foreign currency to hold down the exchange rate of the domestic currency, it creates more domestic money.
The Treasury can no longer use its foreign-exchange account to backstop money-market funds worrying, given the exposure of money-market funds to European banks.
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