News&Notes: Japan Calls for 'Obama Bonds'

Japan economists call for ‘Obama bonds’ By Kosuke Takahashi
TOKYO - Japanese economists, increasingly concerned that the United States might seek to pay its enormous and growing debt obligations in a weakened US dollar, are looking to the possibility of US Treasuries being issued in yen.
The US government needs to borrow at least US$1 trillion in the coming year, excluding the US Treasury’s $700 billion plan to bail out the financial and other industries, said Kazuo Mizuno, chief economist in Tokyo at Mitsubishi UFJ Securities Co, a unit of Japan’s largest publicly traded lender by assets. That amount is likely to grow as the US government continues to rescue failed parts of the economy and has to raise more debt - that is, issue government bonds, or Treasuries - to fund such rescues.
Since 2004, when the amount of the government bond issuance reached an annual average of $400 billion, 94% of new buyers of US government bonds have been foreigners, Mizuno told Asia Times Online. Read the rest of this story by clicking the link below:
http://www.atimes.com/atimes/Japan/JK19Dh01.html
RCM Comment: This is a significant story. The ramifications of this thought process by Japan, a country that is considered a major ally to the U.S., shakes the very foundation of the belief that the U.S.$ is the undisputed world reserve currency. Even a slight shift in the reserve currency perception will have a profound impact on the value of the U.S.$. When we couple this development with the end of the redemption/repatriation cycle we can expect a serious move lower in the value of the U.S.$ and a subsequent rally in Gold. In fact, this type of action will be exactly what the Fed wants to see. Reread Bernanke's 2002 speech to further understand why the Fed wants a weak U.S.$ even if they publicly say otherwise. Simply explained, the Fed is fighting deflation at all costs and will welcome signs of inflation, such as rising Gold prices.