Interesting read on the future of the US Dollar >>

http://www.independent.co.uk/news/business/news/the-demise-of-the-dollar-1798175.html

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Yes, interesting. Not really unexpected though. Countries have been trying to get out from under US dominance for decades. This might enable them to do it.

- Peter.

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"The thing is Bob, its not that I'm lazy...its that I just don't care."

I have a problem making pictures out of words but...will this make the price of oil less in the US if they base it on the Yen? Didn't the article say the phase out would take nine years?

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No, probably more. We're going to be scr...d

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Assuming it actually occurred, it would destroy the value of the dollar, which would make the price of oil here higher (in terms of dollars).

It's a long way further than 9 years IMO. There are 3 oil exchanges, one in London, one in Chicago, and one in Dubai. All are traded in dollars. So new exchanges are going to have to be built, without the help of the existing markets, as Dubai's was. American companies are the biggest explorers, pumpers, and refiners of oil. It's possible Exxon et al will simply move to another country, but that transition is going to cost a lot of money. And as mentioned in the article, most countries have their reserves in dollars.
And if it's interim currency is gold, there's going to be cost in actual delivery of the payment.

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1984 300TD

Why do they want to convert from US dollars? Is it because of China?

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"It's normal for these things to empty your wallet and break your heart in the process."
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It is not a matter of if but a matter of when. Who would like to hold US treasury bond which yields 3.24% ( 10 years ) but the $ goes down in value more than that.

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The Arabs because they don't want to be beholden to the US anymore and probably don't want to keep having wars fought there that aren't of their choosing. The French want cheap oil and will do whatever they can to get it. The Chinese are buying so much of it they want control of the market. The Russians have a ton of oil, but don't have the technology to get it out of the ground, but everyone who offers to get it out basically wants the oil for pennies.
Whoever's currency oil is traded in becomes a lot richer because their currency becomes more desirable since oil can only be purchased with it.

Right now, America is king of oil, and thus king of the world. The proletariat (other countries) want to overthrow the king and get their piece.





I suspect a lot of these countries are going to want the exchange in their own currency, so these talks for now should be taken with a grain of salt. Some kind of rotating currency for buying oil is going to make the monetary value of all of them fluctuate wildly. Speculators would manipulate the hell out of both the currency trade and the oil trade.

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1984 300TD

Thanks for the explanation. Here's a scary thought- the Chinese offer to get Russia's oil out of the ground for them....tht might create alittle competition with the Arab states for oil....where do the Spanish countries stand with purchasing oil?

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"It's normal for these things to empty your wallet and break your heart in the process."
2012 SLK 350
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I think the goal is to find the most stable currency to use as the trading medium, is it not? The dollar has historically been very stable, relative to other currencies. Our huge debt load and growing trade deficit will not contribute to the stability of the dollar.

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In retrospect, taking the dollar off of the gold standard 3 decades ago probably wasn't a good idea...

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No. The dollar is still stable, it's just not as valuable as it was. That's a good thing for purchasers of oil short term. Our debt causes concern for those holding dollars because those countries have less wealth. And with less wealth, they can buy less other stuff. That concern + not being beholden to America anymore is driving this IMO.


We can't even come close to covering the dollars out there with gold. Getting off the gold standard made us much richer than we'd be if we hadn't.

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1984 300TD

Yes, this is pretty much the essence of the problem. Your dollar is always worth a dollar to you but the value varies greatly against other currencies. Other nations don't want to be paid in US$ for their products when the value of that dollar is declining compared to their own home currency.

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Jonathan

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I don't know that many people outside the US and 1st world countries' corporations have the technology, but Russia has in the past dumped oil into the markets as a shot across the bow of the Middle East.

You mean the Venezuelans, etc.? Right now oil trade is restricted through the 3 exchanges, they would not want to keep the dollar currency.

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1984 300TD