Why keep that cash in the US?

[Dr.Dimitri Vulis KOTM]

Adam Shostack <adam at homeport.org> writes:

> HOUSTON (AP) -- The U.S. government can seize $7.9 million
> from the bank account of Mexico's former top drug prosecutor, who was
> accused of taking bribes from drug traffickers, a jury decided
> Saturday.
>
> http://www.cnn.com/US/9703/15/mexico.money.ap/index.html

This reminds me of the story of how the Eurodollar market was born.
Once upon a time, most countries had some U.S. dollar reserves which
they kept on deposit in the U.S.  The U.S.S.R. was one of those countries.
One day the U.S. indicated its desire to freeze Soviet deposits because
it did not like Soviet foreign policy (the way it subsequently froze
Iraq's and Iran's assets). The Soviets wisely took out their money,
took it to London, and started loaning it out at better interest rates
that they had in the U.S. (Prior to this transfer, it was very hard to
find a large dollar-denominated loan outside the U.S.) Soon many U.S.
investors realized that this was a good deal and took their money out
of the U.S., eventually leading to the "credit crunch" in the '70's.

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Dr.Dimitri Vulis KOTM
Brighton Beach Boardwalk BBS, Forest Hills, N.Y.: +1-718-261-2013, 14.4Kbps