THE PICTURE FOR U.S. SPENDING RESTRAINT IS NOT BRIGHT, AND THE GLOBAL CURRENCY MARKETS FINALLY UNDERSTAND THE CONSEQUENCES
The global currency monitors look around and see Lebanon, Palestine, Iraq and Iran. They hear arguments for a Shiite state in eastern Iraq, where most of the oil fields are and they realize that Iran has won the first battle in the war for energy assets in the Iraq region. We predict that many more battles for energy assets in this region may develop soon.
Seeing these developments they say to themselves the following: The U.S. will be spending money to secure this region while maintaining a full plate of domestic spending. They also recall the statement by Milton Friedman who famously said, “Nothing is so permanent as a temporary government program.” We can argue Middle East military spending started as a temporary government program and has grown to a much bigger and more permanent program.
5 YEAR CHART OF THE U.S. DOLLAR