$us/gold is dependent on military dominance, page-2

  1. 708 Posts.
    The Iraq 'conflict' will be a non event in the military sense. However, this does not mean that the legacy of the conflict will not influence world events in the future. The US is living dangerously by throwing fuel to the Anti-American fire which is very strong in the Musilim world. And not only there... Their irresponsible actions will provoke more terrorism, not less.

    The US has relied on foreign credit & foreign capital inflows into the US to settle continuing balance of payments deficits. This cannot go on forever. Relying on foreign capital is dangerous because of the perceptions of foreign investors regarding the desirability of placing funds in the US can change quite abruptly.

    To this point, foreign central banks and foreign investors have regarded US securities and bonds as good investments and have been willing to extend an increasing volume of international credit to the US. At some point however, (and this is probably already occuring) foreign governments and investors will become disillusioned with holding US dollars and when this occurs, the value of the dollar WILL decline in international markets.

    I read somewhere that the US needs to attract almost $1.5B in net foreign investment every day just to prevent the US$ from falling.

    Good luck!

    I can't really buy into the Iraq, Gold and US dollar connections theory but I do admit it is a nice and easy 'media explanation' for US dollar weakness and gold price strength.

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