During a conversation about QE, I was typing in an irc economics channel, sort of stream-of-conscious chatting with others, and with some minor editing difference, I typed the following. I wonder if, in your opinion, this holds any water.

"the US can choose to service a world reserve currency or it can choose to service a local national currency. It is now making the switch from its servicing its historical (post-Bretton-Woods) role as reserve currency and transitioning to servicing it as a national currency. and in so doing, it is distorting world markets.

in short, the FED is resolving the Triffin Dilemma by disfavoring the global reserve role and favoring the national currency role.

the important thing that is looming for the US is that it has a terrific amount of debt to roll over in the next 2-3 years. something like 45-48% of its total debt. QE is a desperate attempt to game the rollover so that new notes aren't bought at much higher interest rates.

The flaw in this plan is that the whole world has a say.

I believe the FED is saying that they enacted QE1, QE1.5, and the looming QE2 to boost the economy but is in reality aiming to do two primary things: 1) rollover that debt with a low financing cost as possible, and 2) to recapitalize the banks (via paying interest on EXCRESNS). #2 may be necessary for #1.

the fact that the largest banks, the finance industry in general, and non-bank corporations are sitting on such huge piles of money right now, speaks to the level of uncertainty and the resultant hedging/savings, all of which points to a problem that is NOT based in the monetary unit, per se.

...so I don't see the FED as doing anything helpful other than recapitalizing its owner banks so that they can front run the Treasury auctions for the foreseeable future (and thus enable the massive fiscal problems of the government spenders), which has eclipsed the importance of servicing a world reserve currency.

(especially in the face of the obvious decline of the US empire and looming reorganization of the EU, future investment is heading east, as confidence in investment in China rises with their continual improvement of rule of law, as counterpoint to the increasing risk of investing in a US with a degrading legal infrastructure.)"

...am I off my rocker or is that a cogent view?

RESPONSE

It is certainly a cogent view and has a firm foundation in what is happening.

the problem is that the US is attempting to address its domestic needs without releasing the reins of global power, and is working with the status quo to slow down the evolution to a more independent global currency which it does not control.

It is very similar to the position of Britain as its own empire was fading.