dlaw

The Dollar vs. Treasuries Dichotomy

Excellent article asking an excellent question.

Portfolio rebalancing in the wake of the credit disaster is truly breathtaking. Investors would rather go risk-free than earn a risk premium, apparently. In a deflationary secnario, of course, the effective return on Treasuries is much higher, since the money received is more valuable than the money deposited - particularly if you look at the performance of the top 20 world currencies against the dollar.