The United States economy currently depends on foreigners purchasing $2 billion of U.S dollar denominated assets, per day, just to keep the dollar
stable. If the foreign currency stopped for any reason, or a major purchaser of U.S dollars stopped trading the U.S economy would plummet until a much
lower, new equilibrium was reached. Foreigners bought $1.01 trillion dollars in U.S securities for the 12 month period ending September 2005. That is
up from $866.6 billion for the same period in 2004.
NEW YORK - It's an addiction. Every day, the United States sucks in more and more of it from abroad, just to keep the nation going. We speak, of
course, about foreign money
At our current rate of trade and budget deficits, foreigners need to purchase $2 billion in dollar-denominated assets each day just to keep the dollar
stable, said Axel Merk, who manages $60 million at Merk Investments and runs the Merk Hard Currency Fund.
Over half the national debt is now financed by foreigners, according to Roger Ibbotson, chairman of the financial consulting firm Ibbotson Associates
in Chicago and a professor at Yale School of Management. That's been true since 1980, but the difference now, he says, "is the scale of the game."
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This story caught my eye because it high lights the fact that corporate main stream media are making noises about the U.S' economic reliance on
foreign currency. It also underscores the relative vulnerability to foreign manipulation the U.S economy is currently faced with.
If the likes of Iran and Venezuela were to suddenly stop trading their oil in American dollars, and switch to Euros it would end the daily trade of
$280 million in American dollars (Iran: $152,500,000 & Venezuela: $128,100,000, based on $61/barrel). That equates to about 15% of the foreign
currency required to keep the U.S stable.
What's stopping Chavez and Ahmadinejad from switching to Euros in a petro-dollar warfare?