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

reply to DrModem

Re: Dollar to be dropped as the oil currency by 2018

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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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.