The Site > Old Forums > It Is The Economy, Stupid > Dollar to be dropped as the oil currency by 2018

Dollar to be dropped as the oil currency by 2018

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In the most profound financial change in recent Middle East history, Gulf Arabs are planning – along with China, Russia, Japan and France – to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar.

*snip*

Chinese financial sources believe President Barack Obama is too busy fixing the US economy to concentrate on the extraordinary implications of the transition from the dollar in nine years' time. The current deadline for the currency transition is 2018.

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Maybe this is the wake up call we need to start moving towards alternate fuels, so we don't rely on oil so much.

There's enough innovation already out there that could be tuned and further implemented in the span of the next 9 years.

- FM

reply to DrModem
Excellent find. Serious stuff if true.

said by petrodollar warfare definition--> »en.wikipedia.org/wiki/Petrodollar_warfare :

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The phrase petrodollar warfare refers to a hypothesis that a hidden, driving force of United States foreign policy over recent decades has been the status of the United States dollar as the world's dominant reserve currency and as the currency in which oil is priced. The term was coined by William R. Clark, who has written a book with the same title. The phrase oil currency wars is sometimes used with the same meaning.

Supporters of this hypothesis believe that the value of the U.S. dollar is determined by the fact that many key commodities (particularly oil and natural gas) are denominated in dollars. They believe that if the denomination changes to another currency, such as the euro, many countries would sell dollars and cause the banks to shift their reserves because they would no longer need dollars to buy oil and gas. This would weaken the dollar relative to the euro (see supply and demand). The core of the hypothesis is that U.S. administrations are greatly motivated by fear of the consequences of a weaker dollar, particularly higher oil prices. This motivation is seen as underlying and explaining many aspects of U.S. foreign policy, including the ongoing Iraq War.

Economists generally agree that higher oil prices pose a risk of inflation, recession, or both. Inflation would almost certainly rise if the dollar were to depreciate heavily.

At least one U.S. Representative, Republican Ron Paul of Texas, has made very strong statements advancing similar views, using the phrase “dollar hegemony” to describe U.S. policy and proposing related reforms

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said by dollar hegemony definition --> »en.wikipedia.org/wiki/Dollar_hegemony :

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• All central banks have since been forced to hold more dollar reserves than they otherwise need to ward off sudden speculative attacks on their currencies in financial markets.

..."dollar hegemony" prevents the exporting nations from spending domestically the dollars they earn from the U.S. trade deficit and forces them to finance the U.S. capital account surplus, thus shipping real wealth to the U.S. in exchange for the privilege of financing U.S. debt to further develop the U.S. economy.

It should be noted that most of the above paragraph describes a controversial point of view. However, at the end of the 20th century it was for the most part undisputed that the US dollar is the most important reserve currency in the world.

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said by U.S. Congressman Ron Paul--> »www.lewrockwell.com/paul/paul303.html :

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Most importantly, the dollar/oil relationship has to be maintained to keep the dollar as a preeminent currency. Any attack on this relationship will be forcefully challenged – as it already has been.

In November 2000 Saddam Hussein demanded Euros for his oil. His arrogance was a threat to the dollar; his lack of any military might was never a threat. At the first cabinet meeting with the new administration in 2001, as reported by Treasury Secretary Paul O’Neill, the major topic was how we would get rid of Saddam Hussein – though there was no evidence whatsoever he posed a threat to us. This deep concern for Saddam Hussein surprised and shocked O’Neill.

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said by BusinessWeek--> »www.businessweek.com/globalbiz/c···4046.htm :

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There's an entire generation of people in their late 20s and early 30s who came of age during Japan's so-called lost decade [from about 1990 to 2003] , a stretch of economic stagnation that started to ease in 2003. Through that period, with Japanese companies in retrenchment mode, young people faced what came to be known as a "hiring ice age." Many settled for odd jobs or part-time work to make ends meet but hoped eventually to find their way into regular employment with the stars of corporate Japan. Instead, they're being passed over in favor of new graduates—a serious problem in a country that still values lifetime employment and frowns on midcareer job-hopping.

This group is called the "lost" or "suffering" generation. Some 3.3 million Japanese aged 25 to 34 work as temps or contract employees.

These millions of young people face a life that's vastly different from that of their parents. For Japan's postwar baby boomers, jobs provided certainty, spurring them to partner and procreate. Faced with insecurity, many of Japan's twenty- and thirtysomethings are doing neither.

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reply to DrModem
gmm things should be interesting.
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A is A.

reply to dogma

reply to DrModem
Look this is a depression, and all of it has been false from the start, and thank god a few months ago a member no longer with us recommended to buy gold and he was so right about the banks.

I just wish he would come back cause the guy is missed.

reply to dogma
China and India are rising consumer nations while the U.S. is importing less. The current trend indicates the U.S. consumer is descending toward irrelevance because their debt based purchasing power has collapsed. Due to the alt-A and option ARM resets looming in 2011, the U.S. has little chance of recovery until spring 2013. The failure to meaningfully reform U.S. financial markets means we can expect more economic carnage rooted in the greed of Wall Street titans. The U.S. and Canadian economies are more vulnerable to additional oil price shocks than China, Europe and oil exporting countries. The loss of Mexican oil revenue due to their production peaking may result in a war on our southern border that would distract us. The world sees the writing on the wall and is trying to rid itself of U.S. baggage by dumping the petrodollar.

reply to BankBuster

Oil states are denying this now:

»uk.biz.yahoo.com/06102009/325/oi···dlr.html

reply to DrModem
Interview with Robert Fisk, the author of the story, on AlJazeera...

reply to DrModem
I know everyone believes in what the media (government controled) says about the U.S. needing Arab oil, but that is one of the biggest lies around.
There are billions and billions of barrels of oil all across the U.S. (and don't leave out natural gas too) but we won't touch it until the price hits well over $300 a barrel if not even higher.
Solar power will not work (no sun no power), electric cars will not work (it would cost a few of hundred trillion dollars to wire up every street in every city), wind power will also fail (no wind no power).
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»www.ip-adress.com/ip_tracer/

reply to badtrip
To go totally electric on cars you'd need a generator the size of a mac truck to run it without the help of OIL.
The generator in your car now only keeps your tiny battery charged because the battery doesn't use that much electric.
Do you really believe you can drive cross country or even a few hundred miles without a recharge from an outside source?
Solar power stores power in batteries that can and will break down one way or another, any idea on how long it would take to find a bunch of dead ones amoung a few million of them? How many solar panels/batteries do you think a state like New York or California would need to supply everyone with power and how much will something like that cost? now mulitipy that by 49.
And what happens when it's cloudy for weeks on end? And/or the wind doesn't blow?
You really think it's a wise idea to depend on Mother Nature for power?
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»www.ip-adress.com/ip_tracer/

reply to dogma
I think our difference in perception comes from my inclusion of peak oil. I think that peak oil will kill globalization either by making fuel expensive or scarce or by the resulting economic carnage reducing demand. By buying up resources around the world China seems to recognize what is on the horizon while the U.S. continues partying blissfully unaware into the night. The U.S. is heading for a prolonged depression which will decimate our service based economy and thereby reduce demand. Due to an insubstantial economy and utter failure at economic reform, China sees the U.S. consumer receding toward irrelevance. China's economic future lies in the rise of its domestic consumers and diversifying its exports to the world.

U.S. Imports from China through July 2009 shows that instead of increasing at an annual rate of 5.1% between 2007 and 2008, imports are down 7.8% since July 2008 compared to 2008. This is not what China wants.

reply to The Pig
Where I live there are many, many people who use electric vehicles as their primary transportation. There are distance limits and the technology isn't quite there yet for the mainstream but I'll bet that unless something catastrophic happens in the US, vehicles that are primarily electric powered will be mainstream within 20 years (and probably less).

Oil, of course will be around for a long long time. I won't argue against that.

reply to The Pig

reply to DrModem
Ok we can agree all the points of the good and the bad.
But, when it comes down to the main factor, as of now without price increases which there will be many it would cost me close to $50,000 to run my home completely with just solar power how much would it cost to power a city?
How much will it cost you to go solar? Make that 50% 100% and post your cost.
»www.findsolar.com/index.php?page=rightforme

Forget OIL and GAS for now and just think SOLAR.
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»www.ip-adress.com/ip_tracer/