$this->bbcode_second_pass_quote('JayHMorrison', '')$this->bbcode_second_pass_quote('Sedona', '
')Think of what would happen to the dollar if that took place.
PeakOil is You
THE Iraqi Civil War Thread (merged)
by Sedona » Mon 06 Sep 2004, 20:37:34
Not much. Total oil sales on the planet represent only 3% of total dollar transfers on the international currency markets.
Maybe oil sales are 3%, but so long as almost 70% of world trade is done in dollars, the dollar is the currency which central banks accumulate as reserves. But central banks, whether China or Japan or Brazil or Russia, do not simply stack dollars in their vaults. Currencies have one advantage over gold. A central bank can use it to buy the state bonds of the issuer, the United States. Most countries around the world are forced to control trade deficits or face currency collapse. Not the United States. This is because of the dollar reserve currency role. And the underpinning of the reserve role is the petrodollar. Every nation needs to get dollars to import oil, some more than others. This means their trade targets dollar countries, above all the U.S.
Because oil is an essential commodity for every nation, the Petrodollar system, which exists to the present, demands the buildup of huge trade surpluses in order to accumulate dollar surpluses. This is the case for every country but one — the United States which controls the dollar and prints it at will or fiat. Because today the majority of all international trade is done in dollars, countries must go abroad to get the means of payment they cannot themselves issue. The entire global trade structure today works around this dynamic, from Russia to China, from Brazil to South Korea and Japan. Everyone aims to maximize dollar surpluses from their export trade.
To keep this process going, the United States has agreed to be ‘importer of last resort’ because its entire monetary hegemony depends on this dollar recycling.
The central banks of Japan, China, South Korea, Russia and the rest all buy U.S. Treasury securities with their dollars. That in turn allows the United States to have a stable dollar, far lower interest rates, and run a $ 500 billion annual balance of payments deficit with the rest of the world. The Federal Reserve controls the dollar printing presses, and the world needs its dollars. It is as simple as that.
So, I disagree Jay, a move to the euro for oil sales would have a huge impact.
- Sedona
by Sedona » Mon 06 Sep 2004, 20:40:36
$this->bbcode_second_pass_quote('Aaron', '')$this->bbcode_second_pass_quote('', 'd')emocratically elected Chavez administration.
A joke yes?
![[smilie=qright2.gif]](https://udev.peakoil.com/forums/images/smilies/qright2.gif "qright2")
Yeah, ok...you got me there....I was kind of at a loss for a better word. The whole thing going on down there is outside the box.
Monte
- Sedona
