Exploring Hydrocarbon Depletion
NEW! Members Only Forums!
Access more articles, news & discussion by becoming a PeakOil.com Member.
The idea was to tie Oil and the Dollar together.
The_Virginian wrote: Fast forward almost 60 years and Europe has found her legs again, Oil is starting a decline, China makes most things in the US, and the worls is not so happy with the US being the only "superpower" for 10 years or so. But the Euro was always meant to compete against the Federal Reserve Note, and so it did....
The_Virginian wrote: Factor in the debt they buy (as you say), and the fact they depend on exporting to China, USA, Europe Etc. and the whole world is in for an economic disaster if the USA implodes too quickly...
MonteQuest wrote:Yes, the central bankers face a choice: let the dollar sink, or pump up their domestic money supply making credit easier to obtain. But it can have a disastrous effect on homegrown banking systems—as the Asian countries discovered in 1997 and 98. Excessive dollar purchases led to excessive money creation, which led to rampant speculation, asset price bubbles and—eventually—a full-blown financial panic, which in turn led to the tech stock bubble crash in 2000.The_Virginian wrote: Factor in the debt they buy (as you say), and the fact they depend on exporting to China, USA, Europe Etc. and the whole world is in for an economic disaster if the USA implodes too quickly...
The irony of this may have been lost on Americans (most of whom were oblivious anyway) but not on the Asians: In trying to prop up the dollar, they blew up their own banking systems, causing a massive run on their own currencies, forcing them to go hat in hand to the International Monetary Fund (IMF) for emergency loans of, yes, dollars.
You know, sometimes I wish I didn't know jack-shit about all this economics crap and could just sit back and drink my Corona and lime in peace. And you know, trying to explain PO and currency markets and such to Joe-Blow the Rag Man makes me very afraid of what the coming crisis has in store for us all. Either they won't listen or they don't get it. Never saw so many rolling eyes. Denial will be everywhere , not just in Egypt.
Falconoffury wrote:JackBob, let me give you a few more things to consider. If Euro becomes the standard for purchasing oil, the US loses a position of power over oil. The country will be at the mercy of the countries who print Euros. The US imports more oil than anyone, so we would certainly need a huge reserve of Euros. I think the US would collapse without the power over oil. The difficulty in buying energy would make things tough to manufacture and export goods. With the oil dependence and deficit, the US is in a point of no return. The country needs currency control over oil in order to stay afloat.
European businesses would find their exports in precipitous decline (everything denominated in euros - too expensive to buy) while the US would export like crazy (everything in $ is now cheap).
Imagine this: You are deep in debt and have very little money in the bank. But every day you write a check to cover your expenses. Your checks are worthless but they keep buying stuff because those checks you write never reach the bank. You have an agreement with the oil merchants (OPEC) that they will accept only your checks as payment for one thing everyone wants, and must have--oil.
This means everyone must hoard your checks so they can buy the oil they need. Since they have to keep a stock of your checks, they use them to buy other stuff too. You write a check to buy a TV, the TV shop owner swaps your check for oil, that seller buys some vegetables at the fruit shop, the produce man passes it on to buy bread, the baker buys some flour with it, and on it goes, round and round--but never back to the bank where it would bounce. You have generated a huge debt on your books, but so long as your checks never reach the bank, you don't have to pay. In effect, you have received your TV for free!
This is the position the U.S.A. has enjoyed for 30 years--it has been getting a free world trade ride for all that time. It has been receiving a huge subsidy from everyone else in the world. And as our debt grew, we printed more dollars (wrote more checks) to keep trading.
Then one day, one of the oil merchants--let's say Iraq--says he is going to accept another person's checks--the euro--and a couple of others think that might be a good idea, too--let's say Iran and North Korea. If this spreads, people are going to stop hoarding your checks and they will come flying home to the bank. Since you don't have enough in the bank to cover all the checks, you are going to be in big trouble! But you are big, tough and very aggressive. You don't scare the other guy (European Union) who can write checks (euros), he's pretty big too, but given a "legitimate" excuse, you can beat the tar out of the oil merchant and scare him and his buddies into taking only your checks again. And that, in a nutshell, is what the U.S.military is doing right now with Iraq.
Bottom line, foreign demand for the U.S. dollar funds the U.S. federal budget deficits. Foreign investors flush with dollars typically look to U.S. treasury securities as a means of secure investment. With a large reduction in such investment, the country could potentially go into default. For example: If you owe your bank $10,000 and you can't pay it back, you've got a problem. But if you owe your bank $3.5 trillion and can't pay it back, then the bank has a problem. In finance, at least, size does matter. Things could turn very bad, very quickly. Investment money would flee the country, real estate values would plummet, and Americans would shortly find themselves living in Third-World conditions. We'll be like the monarch used to riding around in an extravagant litter, only to find ourselves dropped to the ground with no hands to carry us.
Permanently_Baffled wrote:I just have one question if the Iraq war was partly about maintaining the oil trade in dollars what did the UK get out of it ? Surely if Tony Blair is lobbying to get into the Euro he would have not backed the Iraq war as he would have wanted the oil trade to go over to Euro's?
What is reality? The defining dramatic moment in the film The Matrix occurs just after Morpheus invites Neo to choose between a red pill and a blue pill. The red pill promises ?the truth, nothing more.? Neo takes the red pill and awakes to reality?something utterly different from anything Neo, or the audience, could have expected. What Neo had assumed to be reality turned out to be only a collective illusion, fabricated by the Matrix and fed to a population that is asleep, cocooned in grotesque embryonic pods.
Our perspective on the political process, and on the roles of the left and the right, is very far from reality. It is a fabricated collective illusion. Morpheus tells Neo that the Matrix is "the world that was pulled over your eyes to hide you from the truth.... As long as the Matrix exists, humanity cannot be free." Consensus political reality is precisely such a matrix. Growing glitches in the matrix weren't noticed by most people in the West, because the early years of the 20th Century brought unprecedented levels of Western prosperity and social progress. But the matrix cannot fool all of the people all of the time. In the 1960s large numbers of Westerners, particularly the young and well educated, began to notice glitches in the matrix and, as you know, their intervention changed the world.
I know--I was one of those who rose to the occasion. Many of us saw the writings on the wall and began to develop a hypothesis on the origins of the matrix. At that time, it was difficult to garner any solid information to support our hypotheses. Today, with the advent of the Internet, together with the continued unfolding of the New World Order agenda on the ground, it has been relatively easy to confirm and to expand the original hypothesis. The evidence has become overwhelming and conclusive. There is a New World Order agenda; it is a consciously organized project; it brings the end of national sovereignty and the destabilization of Western democracy; it is based on the intentional maintenance of international conflict; and it is to be backed by a ruthless and centralized military force.
Users browsing this forum: No registered users and 13 guests