[platypusrefugee]

This is just a theory I heard (and I wholly welcome argument and disproving it) that the reason why we went into Iraq and are currently threatening Iran is oil. Not that the US needs it but rather it was being leveraged as a way to devalue the American Dollar. Iraq was seeking to begin major oil production and have their oil priced in Euros instead of Dollars. This would be a HUGE non-confidence vote in the American Dollar which is pretty much based on international credit rather than a gold standard. So in acting on this, Iraq was attacked, Saddam removed, and a friendly government put in that when the oil was eventually returned to a production level, it would be priced in Dollars. With Iran now, it appears that they are trying to get a nuclear program under way so as to free up more oil for export purposes and they would seek to do the same move of pricing in Euros and to protect our market, the US is trying to prevent Iran from getting this nuclear power program running. This forces Iran to consume their own oil for power and reduces how much oil they can put out on the market.


Of course, there are holes in this such as "Well if it simply took a repricing to hit the US so hard then what keeps Saudi Arabia and OPEC from pricing their oil in Euros and destroying the US's economy?" I have no idea...which is why it's just a theory and not fact.


By the way, hi, I'm Jon. I currently live in Los Angeles, originally from New Orleans, politically, I reside somewhere between centrist and libertarian. The candidate I support for president is Ron Paul.

[Quantum_Wizard]

I have heard this theory before and I don't buy it. Of course since oil is priced in dollars, people who want to trade oil must hold some dollars at least until the trade has been completed, but after that they can exchange their dollars for some other currency if they wish. So pricing of oil in dollars might slightly increase the demand for dollars but not much.

platypusrefugee wrote:

This would be a HUGE non-confidence vote in the American Dollar which is pretty much based on international credit rather than a gold standard.

Pretty much no currency today is based on gold standard. Most currencies (including the euro) are fiat currencies and there are good reasons for that.

[platypusrefugee]

Since the Euro appears to be stronger than the dollar....wouldn't it hurt the dollar if a country with a substantial oil output priced their oil in Euros as opposed to dollars? Or is there something that I am missing in economic theory here? Admittedly, the global economy is something I'm rather ignorant on at the moment; though, with this theory, I'm guessing I should invest the time to teach myself.

[Psudo]

I don't know much about it, but a quick google search came up with this:

The India Times wrote:

Safety lies in conducting all international transactions in one currency rather than many. If you trade in dollars, borrow in euros, and keep foreign exchange reserves in yen, you run several risks. If the yen falls against the dollar, your forex reserves will decline even as your imports rise. If the euro rises against the dollar and yen, your debts will increase even as your exports and foreign exchange reserves fall.

Countries and companies are both risk averse. Avoiding currency risk means keeping most foreign transactions in one currency. And the safest currency is the dollar.

Why the dollar rather than the euro or yen? History provides the answer. In the heyday of British colonialism, the pound sterling was dominant. But World War II shattered all economies other than the US. At the end of that war, the only convertible currency in the world was the dollar. Ever since, global confidence has remained highest in the dollar.

[Quantum_Wizard]

platypusrefugee wrote:

Since the Euro appears to be stronger than the dollar....wouldn't it hurt the dollar if a country with a substantial oil output priced their oil in Euros as opposed to dollars? Or is there something that I am missing in economic theory here? Admittedly, the global economy is something I'm rather ignorant on at the moment; though, with this theory, I'm guessing I should invest the time to teach myself.

I'm not an economist, but I think it would hurt a bit but not much. If the oil producers would switch their forex reserves from dollars to euros that would hurt. However if they only price their oil in euros they can always exchange the euros they earn for dollars if they prefer to hold dollars.

However, Asian countries have even bigger reserves. I read somewhere that China has more than $1 trillion and that at least more than 70% of that is in dollars.

[Quantum_Wizard]

I might add that the large current account deficit run by US will, if it continues long enough, pose a greater risk to the international status of the Almighty Dollar than does a change in pricing of oil.

[tritium]

[Calgary123]

This isn't even a "theory" anymore... this is fact.

[platypusrefugee]

tritium wrote:

insert picture of oil companies for words

wrong kind of oil theory.....that one is more inspired by the nuttz idea of going to war to get cheaper oil.



note: i can't post anything with links or pictures? what kind of fascist board is this? can't even properly respond to posts!!


but then again, i should probably post more frequently so as to get past the limit.

[OPP]

platypusrefugee wrote:

This is just a theory I heard (and I wholly welcome argument and disproving it) that the reason why we went into Iraq and are currently threatening Iran is oil. Not that the US needs it but rather it was being leveraged as a way to devalue the American Dollar. Iraq was seeking to begin major oil production and have their oil priced in Euros instead of Dollars. This would be a HUGE non-confidence vote in the American Dollar which is pretty much based on international credit rather than a gold standard. So in acting on this, Iraq was attacked, Saddam removed, and a friendly government put in that when the oil was eventually returned to a production level, it would be priced in Dollars. With Iran now, it appears that they are trying to get a nuclear program under way so as to free up more oil for export purposes and they would seek to do the same move of pricing in Euros and to protect our market, the US is trying to prevent Iran from getting this nuclear power program running. This forces Iran to consume their own oil for power and reduces how much oil they can put out on the market.


Of course, there are holes in this such as "Well if it simply took a repricing to hit the US so hard then what keeps Saudi Arabia and OPEC from pricing their oil in Euros and destroying the US's economy?" I have no idea...which is why it's just a theory and not fact.


By the way, hi, I'm Jon. I currently live in Los Angeles, originally from New Orleans, politically, I reside somewhere between centrist and libertarian. The candidate I support for president is Ron Paul.

RON PAUL!!!
You fucking genious you!!!
I mentioned to an american a while back that if I was an American that's exactly who I would vote for.

Most of the market is in a transition period. The Euro is very atractive at the moment.
Another theory I heard a year and a half back was from a major french think-tank; Iran was about to go with the Euro and several other oil rich countries was following suit. This would have a huge impact on the American dollar and would be devastating for the U.S. It would also have a huge impact on the European economy as we depend on wall street and the american market to be stable for ours to work properly. The result would be similar to that of the great depression back in the early nineteen hundreds.

[platypusrefugee]

with regards to ron paul, i actually registered republican recently just so i can vote in the primaries and push for ron paul for president. before that, i was registered libertarian...then i realized how much it sucks to not be able to influence either major primary if there's a more mainstream candidate that you favor (i was supporting dean).

[Scape]

[Arctic_Menace]

Awesome, Scape.

[OPP]

Soooo utterly stupid and profoundly ignorant people all in the "professional" american media... amazing.

[platypusrefugee]

i'm fairly certain america is entering into a modern dark age of anti-intellectualism and willing ignorance. it's a bad time for someone like myself since i pride myself on actually 1. taking the time to research and think about issues and 2. willingly admitting i'm wrong so that i can learn from my mistakes and not make those mistakes next time if possible.


but then again, according to polls, a gay black jewish woman has more chance of being president than i do since i'm an atheist....dark ages.