Yes, the ECB needs to compensate for the ongoing bond-selling by bying them up and so stabilizing the yields. But that way they are doing it with new created euro that weakens more and pushes up inflation

GhostofTruth

Take up credit denominated in a weak currency

So rather than "buy" a country's bonds you want to "sell" them.

Buying a bond isn't "taking up credit" -- it's giving it out. It's giving the country a loan. You want to 

 a loan -- you want that country to give 

 money that you have to pay back later, once it's depreciated. If, instead of "buying" a bond from that country you 

 a bond, you get some of their money right away (just like what happens in a loan), but it's not money you have to pay back later, so that's even better. Sell the bond, take the proceeds, and buy a stronger currency with it.

But this part still confuses me: doesn't the act of selling a bond increase interest rates on that country's bonds and therefore strengthen the currency that you want to fall?

Please add a sub called "macro" or "economics" or similar

supertestnet

ok cool this makes more sense to me

> Take up credit denominated in a weak currency

So rather than "buy" a country's bonds you want to "sell" them.

Buying a bond isn't "taking up credit" -- it's giving it out. It's giving the country a loan. You want to *take out* a loan -- you want that country to give *you* money that you have to pay back later, once it's depreciated. If, instead of "buying" a bond from that country you *sell* a bond, you get some of their money right away (just like what happens in a loan), but it's not money you have to pay back later, so that's even better. Sell the bond, take the proceeds, and buy a stronger currency with it.

But this part still confuses me: doesn't the act of selling a bond increase interest rates on that country's bonds and therefore strengthen the currency that you want to fall?