…than this, or so it seems.

A wave of cash is leaving the eurozone, where returns on safe assets are infinitesimal, if they are positive at all, and headed to the US and other refuges such as Denmark and Switzerland.

Europe’s common currency has fallen 22% against the dollar in less than a year, from $1.39 to $1.08. The euro touched a 12-year low of less than $1.05 this month.

Returns on safe assets are infinitesimal in the US, too, with the Fed still actively suppressing interest rates (to the detriment of those Americans dependent on fixed income assets, but that’s another story). Why, then, would money come to the US at the expense of the eurozone—at the expense of the EU?

For one thing, we’re absolutely politically stable, our problems with the present administration (and the Left’s with the previous one) notwithstanding. So, in fact, are the EU and the eurozone subset of it. Here, though, there’s a growing possibility of Greece leaving, and fear that that will spark a cascade; there’s no possibility of, say, Texas leaving the US.

For another, the currency flow tends to become a self-fulfilling prophecy. As money leaves the euro for the dollar, demand for euros falls and for dollars rises, causing the price for euros to drop and for dollars to rise. The increasing disparity in value spurs more movement from the falling value asset to the rising value asset.

The stronger reason comes from where the money is going when it arrives in the US (or Denmark—an EU member, but not part of the eurozone—or Switzerland). Tommy Stubbington, in his Wall Street Journal article at the link noted that much of the flow into the US is going to US Treasury debt instruments: the constituent nations of the eurozone aren’t issuing government bonds at any sort of rate, so their price is relatively high, with those infinitesimal yields. The central banks of euro recipient nations like Denmark, too, are busily lowering national interest rates in an attempt to discourage everyone else from “piling into the krone.”

But the money also is going into equities. The US stock market is the largest, most active in the world, and it’s the least regulated, especially compared with the EU. Given a desire to leave the euro, there’s just no place for the money value to go besides our stock market (another reason for the market’s ongoing rise despite our underlying economy’s ongoing doldrums) and our treasuries. The latter which also helps the Fed get away with suppressing interest rates.

So why Denmark and Switzerland at all? They’re safe places for Europeans to keep their money nearby.