fungibility

Economists love to talk about the relative diesireability of assets using two basic variables: price and yield. These characteristics form the bedrock for most theories of international economics and have been hoisted upon media truncheons this week as cause for concern and explanations for the fall of the dollar.

In my view, this is a naively myopic view of what assets are and why people, institutions, and other sovereigns buy them.

For example, foerign exchange is used instead of naval action to ensure a low exhange rate-it has nothing to do with the intrinsic desireability of us assets, rather the effects on other parts of the balance scale in case of purchase.

Sovereign bonds and the currencies they are denominated in encompass far more than the traditional definitions of "money". They are now foreign policy transmission systems and brand marketing for the "core values" of whatever sovereign they hail from.