Japenese upset about strong yen

[Diane Monaco]

At 11:15 PM 5/20/2002 -0400, you wrote:
>What could they do?  Awhile back one of the more out-there gold-bugs
>mentioned in an essay(I may have posted it) a speech where the Japanese guy
>mentioned the poso of  Japan selling US bonds and buying gold.  That would
>boost interest rates, I would guess.  But I don't see how that would
>strengthen the dollar.

The action of selling US bonds would lower the price of these assets in the 
US bond market.  And it seems to me that in an attempt to purchase these 
lower priced dollar assets, investors would have to enter the foreign 
exchange market to get the dollars to purchase the dollar assets.  This 
would strengthen the dollar.  I think that this may have been behind the 
action of raising the discount rate by the Fed recently -- banks would be 
forced to sell their US bonds for funds.

Diane