Petrodollar Warfare: Dollars, Euros and the Upcoming Iranian Oil Bourse

Originally posted by Jeremiah_John
1 - Unacceptable to US public which already has grave misgivings over Iraq debacle.

Originally posted by Jeremiah_John
2 - Inability to secure any semblance of international backing for adventures in Persia after Iraq WMD BS. They wouldn't even be able to get laughing girl (Rice) to try and make UN case for it.

Originally posted by Jeremiah_John
3 - No forces. US military totally committed in Iraq and Afghanistan.

Originally posted by SwearBear
US in one of those FEMA concentration camps and say they are unpatriotic traitors and terrorists. Many will rather join the military than get thrown in a concentration camp.


Problem solved, let's invade Iran!

[edit on 26/8/2005 by SwearBear]

Originally posted by Thatoneguy
Could someone explain to me what would happen if Iran started trading oil in euros? I mean what would happen to the price of oil and gas and our economy in the US?

Originally posted by Thatoneguy
Could someone explain to me what would happen if Iran started trading oil in euros? I mean what would happen to the price of oil and gas and our economy in the US?

Originally posted by mbkennel
The currency it is priced in is not relevant as long as it is highly liquid and universally available. Both dollars and euros work here, they are nearly interchangable.

Trade between nations has become a cycle in which the U.S. produces dollars and the rest of the world produces things that dollars can buy.

Nations no longer trade to capture comparative advantage but rather to capture needed dollars to service dollar-denominated foreign debts and to accumulate dollar reserves in order to sustain the exchange value of their domestic currencies. In an effort to prevent speculative and potentially harmful attacks on their currencies, those nations' central banks must acquire and hold dollar reserves in amounts corresponding to their own currencies in circulation. This creates a built-in support for a strong dollar that in turn forces the world's central banks to acquire and hold even more dollar reserves, making the dollar stronger still.

This phenomenon is known as "dollar hegemony," which is created by the geopolitically constructed peculiarity that critical commodities, most notably oil, are denominated in dollars. Everyone accepts dollars because dollars can buy oil.

The reality is that the strength of the dollar since 1945 rests on being the international reserve currency for global oil transactions (i.e., "petro-dollar"). The U.S. prints hundreds of billions of these fiat petro-dollars, which are then used by nation states to purchase oil and energy from OPEC producers... . These petro-dollars are then re-cycled from OPEC back into the U.S. via Treasury Bills or other dollar-denominated assets such as U.S. stocks, real estate, etc. The recycling of petro-dollars is the price the U.S. has extracted since 1973 from oil-producing countries for U.S. tolerance of the oil-exporting cartel. [the US - Saudi deal]

Dollar reserves must be invested in U.S. assets which produces a capital-accounts surplus for the U.S. economy.

Since it is the U.S. that prints the petro-dollars, they control the flow of oil. Period. When oil is denominated in dollars through U.S. state action and the dollar is the only fiat currency for trading in oil, an argument can be made that the U.S. essentially owns the world's oil for free. - source - several good essays on this topic!

The Pound Sterling was the primary reserve currency of much of the world in the 18th and 19th centuries. But perpetual current account and fiscal deficits financed by cheap credit and unsustainable monetary and fiscal policies to finance wars and colonial ambitions eventually led to the pound sinking.

Originally posted by Rikimaru
Im sure airstrikes on these installations are still within our ability, i sont think its ability as much as support. As you said people are upset over iraq, now is not a good time to start another war.