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Petro Dollar to be Dethroned

General discussions of the systemic, societal and civilisational effects of depletion.

Re: Petro Dollar to be Dethroned

Unread postby SeaGypsy » Fri 20 Sep 2013, 08:21:20

It can't simply be a matter of faith or an international summit would have already collapsed the dollar in response to QE mark 1,2,3 Infinity. It really is a matter of there not being any viable functioning alternative.

Edit to add: in order for a 'faith collapse' to occur- there would have to be a viable alternative singular nobody wants to have to buy a basket of god knows what currency in order to trade- a basket of basket cases is what such would amount to if enacted tomorrow morning. What will it take to not just create a new global currency but for it to garner the requisite faith? Moses may have been able to achieve moving mountains.
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Re: Petro Dollar to be Dethroned

Unread postby radon1 » Fri 20 Sep 2013, 08:35:14

Dethroned implies that someone will take the throne. Reserve currency is only needed when there is international trade. The reserve currency should be able to buy anything that the buyer may ever need. Except the dollar, there are only two currencies that can more or less provide that now - euro and yuan. Does any of them look more reliable then the dollar? Hardly.

Another alternative - gold/silver. But this is archaic, and may work if the world slides to archaism.
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Re: Petro Dollar to be Dethroned

Unread postby SeaGypsy » Fri 20 Sep 2013, 08:39:21

People keep saying that about Euro and Yuan, but it's not at all realistic- they don't have the scale. Maybe in 10 or 20 years, but what's the world going to be like then? The US economy dwarfs all others in isolation.

Edit to add: Gold would have to become many times more expensive than it is now to have any chance of replacing reserve, the insane rise involved would itself create massive instability. Silver is too abundant in too many places for stability and would suffer the same fate- just with bigger 'coins'.
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Re: Petro Dollar to be Dethroned

Unread postby americandream » Fri 20 Sep 2013, 09:43:53

SeaGypsy wrote:People keep saying that about Euro and Yuan, but it's not at all realistic- they don't have the scale. Maybe in 10 or 20 years, but what's the world going to be like then? The US economy dwarfs all others in isolation.

Edit to add: Gold would have to become many times more expensive than it is now to have any chance of replacing reserve, the insane rise involved would itself create massive instability. Silver is too abundant in too many places for stability and would suffer the same fate- just with bigger 'coins'.


Gold was a store of value in an age when wealth was fixed and held inter-generationally. In the age of merit based wealth and infinite growth, golds value ceiling compels us to resort to a growing choice of alternatives, for example increasingly exotic instruments (derivatives). It is highly unlikely we will be able to rid of ourselves of this dependence as long as infinite growth is with us.
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Re: Petro Dollar to be Dethroned

Unread postby Ron Patterson » Fri 20 Sep 2013, 10:10:39

SeaGypsy wrote:
How long a digital conversion takes is irrelevant to anything worth considering. .3% of $1000 is a cup of coffee. .3% of $5 trillion is more than most countries GDP- a heck of a lot of money for jam.


SeaGypsy, three basis points is not .3% but .03%. And yes that is a lot of money but it is spread over many thousands of banks:
FE Dealers are large commercial banks, which buy and sell FE. Specifically, they are the international departments of large commercial banks in the financial centers of the world: London, New York, Tokyo, Zurich, Frankfurt, Paris, Singapore, Hong Kong, Toronto.

In New York City, there are about 100 such banks.

(ii) Large banks outside the center also participate through their affiliates.

(iii) Small regional banks do not directly participate in the FE market. But to meet their customers' FE need, they deal with correspondant banks. Almost 14,000 commercial banks maintain corresponent relationship with FE dealers.


Banks make their money by the spread between the bid and asked price which, as I said, for all major currencies average about three basis points or three cents for every one hundred dollars.
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Re: Petro Dollar to be Dethroned

Unread postby careinke » Fri 20 Sep 2013, 12:34:04

SteveO wrote:
Ron Patterson wrote:"
The dollar will likely remain the world's benchmark currency unless we have a massive inflation of the dollar. If that happens then the world will have to find another benchmark currency.


There is massive inflation (or perhaps dilution is a better term) in the dollar. The M1 shows it. It will take a loss of faith in the dollar to end is position as the benchmark/reserve currency.

The image is too wide, so I'm posting a link to the chart. http://research.stlouisfed.org/fred2/da ... 30_378.png


That curve looks very familiar..Oh yea I remember, it's an exponential curve, which invariably leads to collapse. Looks like it really took off around 2009. Hmmmmm.....
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Re: Petro Dollar to be Dethroned

Unread postby SeaGypsy » Fri 20 Sep 2013, 16:51:51

Ron Patterson wrote:SeaGypsy wrote:
How long a digital conversion takes is irrelevant to anything worth considering. .3% of $1000 is a cup of coffee. .3% of $5 trillion is more than most countries GDP- a heck of a lot of money for jam.


SeaGypsy, three basis points is not .3% but .03%. And yes that is a lot of money but it is spread over many thousands of banks:
FE Dealers are large commercial banks, which buy and sell FE. Specifically, they are the international departments of large commercial banks in the financial centers of the world: London, New York, Tokyo, Zurich, Frankfurt, Paris, Singapore, Hong Kong, Toronto.

In New York City, there are about 100 such banks.

(ii) Large banks outside the center also participate through their affiliates.

(iii) Small regional banks do not directly participate in the FE market. But to meet their customers' FE need, they deal with correspondant banks. Almost 14,000 commercial banks maintain corresponent relationship with FE dealers.


Banks make their money by the spread between the bid and asked price which, as I said, for all major currencies average about three basis points or three cents for every one hundred dollars.


I stand corrected, (what happens when I stay up too late) the free take is only more than a lot of countries GDP. I notice you ignore the aspect of my post dissing your dissing of $USD reserve status- even the term itself. Why is that? You are free to live in the illusion you are trading Piso for Frank, Baht for Rupiah, but you wouldn't be doing it without somebody in the transaction holding $USD. The actual trade happens through the dollar- not just within trade margins on the benchmark float price as a direct exchange. Same with most commodities. Which is a bonanza for those controlling the supply of Dollars.
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Re: Petro Dollar to be Dethroned

Unread postby americandream » Fri 20 Sep 2013, 17:12:28

SeaGypsy wrote:
Ron Patterson wrote:SeaGypsy wrote:
How long a digital conversion takes is irrelevant to anything worth considering. .3% of $1000 is a cup of coffee. .3% of $5 trillion is more than most countries GDP- a heck of a lot of money for jam.


SeaGypsy, three basis points is not .3% but .03%. And yes that is a lot of money but it is spread over many thousands of banks:
FE Dealers are large commercial banks, which buy and sell FE. Specifically, they are the international departments of large commercial banks in the financial centers of the world: London, New York, Tokyo, Zurich, Frankfurt, Paris, Singapore, Hong Kong, Toronto.

In New York City, there are about 100 such banks.

(ii) Large banks outside the center also participate through their affiliates.

(iii) Small regional banks do not directly participate in the FE market. But to meet their customers' FE need, they deal with correspondant banks. Almost 14,000 commercial banks maintain corresponent relationship with FE dealers.


Banks make their money by the spread between the bid and asked price which, as I said, for all major currencies average about three basis points or three cents for every one hundred dollars.


I stand corrected, (what happens when I stay up too late) the free take is only more than a lot of countries GDP. I notice you ignore the aspect of my post dissing your dissing of $USD reserve status- even the term itself. Why is that? You are free to live in the illusion you are trading Piso for Frank, Baht for Rupiah, but you wouldn't be doing it without somebody in the transaction holding $USD. The actual trade happens through the dollar- not just within trade margins on the benchmark float price as a direct exchange. Same with most commodities. Which is a bonanza for those controlling the supply of Dollars.


Spot on!!

With the advantage Anglo-Saxon liquidity enjoys within the overall basket of global liquidity (a consequence of Britain's imperial success), the dollar simply reflects stored gobal labour surplus in a post imperial world, albeit one that appears parochial. However, the worlds elite have largely acquiesced to this state of affairs (apart from a few nationalist wildcards in places such as Zimbabwe, Venezuela, Cuba and of course, Syria ( it would probably be fairer to characterise Assad as an Arabist or regionalist rather than parochial nationalist.)).

The arrival of limits (peak oil or some other exhaution of the core value adding commodities (labour is another)) will of course see this happy state of affairs collapse. But for the time being, the the story is less one of the processes by which this global system operates (the dollar and the mechanisms by which it serves that value storage function) and more one of the actual substance of this system.
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Re: Petro Dollar to be Dethroned

Unread postby radon1 » Fri 20 Sep 2013, 20:02:01

SeaGypsy wrote:People keep saying that about Euro and Yuan, but it's not at all realistic


But as "petro"-currencies they may work, actually.
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Re: Petro Dollar to be Dethroned

Unread postby SeaGypsy » Fri 20 Sep 2013, 21:21:53

Which would require just on it's own, massive volume increase, huge improvement in stability of the floating Euro, a serious float of the Yuan, etc. None of which is going to happen overnight.
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Re: Petro Dollar to be Dethroned

Unread postby Keith_McClary » Fri 20 Sep 2013, 23:50:05

SeaGypsy wrote:How many of the 2 posters it took to decimate this billionaire's argument are billionaires? (or even millionaires) Makes me wonder how stupid people become so rich.

Wackypedia doesn't think he is a Canadian billionaire:
http://en.wikipedia.org/wiki/List_of_Ca ... _net_worth
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Re: Petro Dollar to be Dethroned

Unread postby americandream » Sat 21 Sep 2013, 04:49:47

radon1 wrote:
SeaGypsy wrote:People keep saying that about Euro and Yuan, but it's not at all realistic


But as "petro"-currencies they may work, actually.


Most unlikely. The necessary trust is not there.

Old Europe is in a troubled neighbourhood prone to interventionism and other inefficiencies as regards parking particular classes of liquidity in its confines for any length of time. China is a new child on the block. It was a mere few decades ago virulently isolationist. Its rapid turnaround still perturbs the capitalist who isn't quite sure what to make of it notwithstanding its magnificient capacity for value amplification.

On the other hand, it was the UK and its child, the US who gave birth to the current order and who continue to develop its capacity to store the value being extracted from China and elsewhere.

China will probably enjoy the same role as Japan. A welcome extension of capitalism's growth radius but not sufficiently transparent enough to take its reigns from the parent.
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Re: Petro Dollar to be Dethroned

Unread postby americandream » Sat 21 Sep 2013, 04:59:29

Keith_McClary wrote:
SeaGypsy wrote:How many of the 2 posters it took to decimate this billionaire's argument are billionaires? (or even millionaires) Makes me wonder how stupid people become so rich.

Wackypedia doesn't think he is a Canadian billionaire:
http://en.wikipedia.org/wiki/List_of_Ca ... _net_worth


There are many of his ilk who actually think the way this fellow does so its probably fair to say that he is articulating popular perceptions. However, capitalism has its own relentless drivers that tend to take the system along particular routes notwithstanding certain agendas. Similar inconsistencies are in the area of the environement where articulated policies are often rendered neutral by the core forces of capital.
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Re: Petro Dollar to be Dethroned

Unread postby radon1 » Sat 21 Sep 2013, 07:03:32

SeaGypsy wrote:Which would require just on it's own, massive volume increase, huge improvement in stability of the floating Euro, a serious float of the Yuan, etc. None of which is going to happen overnight.



americandream wrote:Most unlikely. The necessary trust is not there.


What I am trying to say, I guess, is that being the global reserve currency and a "petro"-currency does not have to be the same thing. We may finish up in a situation where some oil is traded in currencies other than the global reserve one, or where there is no global reserve currency at all.

At the moment, the oil pricing is defined at the oil futures market, which is much greater than that of the physical oil in terms of value, and which is financial/speculative. 80% of this market is reportedly controlled by only two investment banks. There is nothing to suggest that this situation is objectively pre-defined by the laws of economics and as such is inherently stable. Moreover, there are signs that it may be not too long before this situations seriously changes, or at least suffer some disruptions. What kind of repercussions this may entail for the suppliers/customers in the real oil market, one may only guess.

From the point of view of a mono-cultural oil supplier (i.e. producing nothing of significance but oil), for example, the key is his ability to trade his oil for as extensive as possible variety of goods, starting from the vital commodities (foodstuff), to the most technologically advanced gizmos. There are only three regions on the planet that are capable of delivering in this sense in an independent manner - USA, EU and China. USA is the apparent leader - for example, manufacturing alone in the "de-industrialised" USA is greater than the entire GDP of "the industrial powerhouse" Germany, and accordingly, the US dollar is a preferred choice, in general. But the fact that the commodity markets are now primarily based on financial speculation may play havoc on the US, in case these markets are somehow destabilized. For example, in the event of some internal political in-fighting in the US or large-scale upheaval there.

Again, from the point of view of an oil supplier's head of state, it is not important, whether the related financial markets are big enough, or whether the volumes are sufficient or floats are in place etc.; at least this is not the first consideration. The primary consideration is how he is going to feed his populace and deliver iGadgets to the rich, to ensure the basic stability in his country. The level of sophistication of the related financial markets will not matter for him at all as far as these objectives are concerned. Therefore in case of some clinical insanity in the US, he will be looking primarily on who is his main customer is - in case of the EU, he will be able to trade in euros, in case of China - in yuan.

Moreover, some developments in this direction have already taken place. Iran traded its oil in other currencies/"gold" for a while, and China has been introducing swaps with the major commodity suppliers.
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Re: Petro Dollar to be Dethroned

Unread postby SeaGypsy » Sat 21 Sep 2013, 08:22:28

Put very simply Radon; there is too much to lose for too many of the most powerful and richest. Without fail, every country which tries to undermine Dollar hegemony faces some degree of sanction for doing so. China and Russia are only getting away with it for very obvious reasons- cheap labor on the one hand and plentiful oil on the other. The Dollar will be defended in it's position at all costs- especially to everyone else.
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Re: Petro Dollar to be Dethroned

Unread postby americandream » Sat 21 Sep 2013, 17:17:58

Radon

The commercial world has devised a variety of means for ensuring that Western capital gets to the Chinese dividends beast without locking in substantial amounts of that liquidity within that risk profile, long term. One has to remember that on day one of the tie up with China, the previous day, saw a China an isolationst state with no ties to capital. From those roots have sprung a variety of mechanisms to ensure that China is capitalised to deliver dividends within that risk profile.

Likewise with oil contracts. Particular contracts will be suited to direct exchange. Western capitalists will be sanguine as China's easy access to energy ensures that its dividends capacity works efficiently. However, other contracts will continue to use the financing arrangements that have been devised for that particular risk market.

Of couse, certain commentators who are not focussed on risk profiling countries will jump to conclusions from the superficials. But to suggest that risk free America is about to have its currency supplanted by China dispalys a clear misunderstanding of the pecking order in global capitalism, one which will remain robust until the system confronts its own dialectic forces (Switzerland remains another haven, albeit one that lies dormant in this upbeat phase of globalism).
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Re: Petro Dollar to be Dethroned

Unread postby radon1 » Sat 21 Sep 2013, 18:46:44

SeaGypsy wrote:Put very simply Radon; there is too much to lose for too many of the most powerful and richest.
Yes, I agree, we should not misunderestimate them :)

americandream wrote:But to suggest that risk free America is about to have its currency supplanted by China dispalys a clear misunderstanding of the pecking order in global capitalism, one which will remain robust until the system confronts its own dialectic forces.
Fine. I guess what I am saying is - if, hypothetically, the US unexpectedly disappears from the map, the EU/China would be able to ensure the scale of the international trade necessary to maintain the existing modernity order on the entire planet or some of its parts.

Also, the notion of "risk-free" America is taken as kind of an axiom. It is an axiom, until it is not.

(Switzerland remains another haven, albeit one that lies dormant in this upbeat phase of globalism).


The rumors are that the Germans are now traveling to Switzerland and removing the money from their secret Swiss accounts using the cash machines there, and then carry the cash across the Swiss border in their underwear.
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Re: Petro Dollar to be Dethroned

Unread postby americandream » Sat 21 Sep 2013, 19:10:06

Another thing you need to remember is that this system has always been speculative. Large pools of capital tend to move much quicker than smaller, more investment oriented ones. Speculation is what funded colonial English investment in the as then risky American frontier.

It was easier to integrate America within England's emerging social economy, for obvious reasons. And of course, with America being so well endowed resourcing wise, it was quickly in the co-pilots seat and defining the new orders identity.

Later on, efficient mercantilists such as Germany and Japan etc, etc joined these capitalists and merged their fortunes with the capitalist mode of accumulation. This process is ongoing and called globalisation.
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Re: Petro Dollar to be Dethroned

Unread postby americandream » Sat 21 Sep 2013, 19:27:02

The only reason America could disappear is as a consequence of the system's (capitalism) rationale moving beyind its Anglo-Saxon roots to a new mode of accumulation that does not use Anglo-Saxon legal forms (culture).

In other words, the system would have moved beyond capitalism whilst still remaning true to the process of accumulation, the dialecticism that Marx refers to. What that might be is anyone's guess. If accumulation were to remain the core driver, then any mutation will be adding another layer to the process beyond the form and substance of Anglo-Saxon law. I cannot see how mercantilism could improve on capitalism (China and the EU replacing the Anglo-Saxon world) as capitalism is essentially mercantilism plus. So I am at someting of a loss. If America were to fall victim to violence, I suspect decoupling would be underway and spell the end of accumulation.

The only real substantive realignment of modernism (and I mean technological prowess which is not of capitalism but of Reason (although many see capitalism and modernity as one)) would be in a cultural form and more likely than not include the reinstatement of collectivism, a cultural form under which we evolved. We also risk complete collapse with the climate elephant thundering in the background.
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Iran bans US dollar

Unread postby AdamB » Tue 06 Mar 2018, 09:52:39

The government of Iran imposed new restrictions on the use of the US dollar in the country. The use of the US dollar for import operations in the Islamic Republic of Iran has been banned from February 28, Forbes reports with reference to Iranian media. Starting from February 28, any supply orders or other import declarations where US dollars are used will not be processed by the Iranian customs authorities. According to Mehdi Kasraipur, the director of Foreign Exchange Operations and Policy Department of the Central Bank of Iran, the new rules should not affect current trading operations much, given that the use of the American currency in Iran was already limited. Iranian banks could not conduct operations in US dollars because of US sanctions. "Given that the use of the dollar in Iran is already prohibited, traders use alternative currencies in


Iran bans US dollar
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