So, they take
excess dollar liquidity and buy US bonds, forestalling the problem, because bonds will pay them more dollars in the future.
Not exact matches
so now the issue is whether the bond market (or macro hedge funds) eased too much thinking the Fed would choke off
liquidity and now is staring at still a weaker
dollar and high commodity prices indicating an elevated level of
excess liquidity.
if you track marshallian k, a measure of
excess liquidity, it exploded from mid-2000 (when 2s / 10s was inverted) into mid-2003 as the Fed was desperately flooding the sytem with
liquidity and devaluing the
dollar, trying to stop the japanese style carnage.