M dub

The Fallacy of Floating Exchange Rates

"The strength of the Yen is mainly based on speculative demand" How do you know this? Do you have proof or evidence? Or could it just be that the disaster of USD/GBP/EUR puts the yen to shame and capital is flowing back home?

If anything, we seem to be in a period of de-leveraging today, so this part of the argument seems weak, or bit late if we are talking about position unwinding.

Of course, you are quoting Robert Mundell so you have said enough.

The Dollar vs. Treasuries Dichotomy

What we are seeing my friend is FED and/or Treas buying the long end of the curve.

"Hey, we're the government, we can shorten our duration and massively increase our refinancing risk for global depression scenario...why not, if the banks can go bust why can't we join the party?"

Well, its the only trick left in their book and now its gone....