Are excess reserves driving a “currency misalignment”

One of my favourite excuses for the “high” NZ dollar is currency reserves being built up overseas (in order to “keep their currency low” they need to buy up foreign dosh, building up currency reserves you see).  It is an argument the US likes to make without actually doing any analysis as well.

However, work has been done … a while back.

The linked to paper found that reserves were not excessive anywhere, expect China.  A good point to keep in mind no doubt.

  • You can’t trust paper money. In all of history, wherever paper money has been issued, its value has eventually gone to zero. Its intrinsic value is nothing, and there is no exception. Yes, even the dollar.

  • I agree, teh value of the dollar is nothing compared to the euro.