Originally posted by darksided
That would then lead to a panic selling of dollars on world foreign-exchange markets and collapse the role of the dollar as the reserve currency.
Currently Oil can only be bought in US dollars. Oil is the largest traded commodity in the world. But it’s not the only commodity that is priced in US dollar. US dominance is largely dependent on the strength of the US dollar, the military backs this up throughout the world.
First, it should be noted the reason the US dollar is considered the PetroDollar is because the US agreed to assume the debt by recycling dollars into the London and New York banks for currency exchange
Assume what debt? I’m not clear what you’re referring too. (Which debt is created? Could you be more specific?)
That process of recycling is where the term "Petrodollar" came from. In order for oil to trade in Euros, the Euro would have to be printed in great quantity for the exchange.
Why would the ECB object to this? Are you saying they don’t want a world demand for the Euros?
That is because the size of the publicly traded EU government-bond market is still tiny in comparison with the huge US Treasury market.
US has dominated the World since the end of World War 2, so it would have increased its currency market durring this time. Rome had more money in circulation in its time too.
The reason the ECB, or even the EU, can't currently print Euro's to the levels required to support an oil bourse is because the Euro isn't backed by anything.
There will be a period of adjustment, but in the end its not good for the US. Since Nixon the US Dollar isn’t backed by anything either.
the world because it is backed by the F-16 standard, not the gold standard, and the F-16 standard is secured with strategic relationships with Saudi Arabia and several other OPEC nations.
If you mean the military by “F-16 standard” you might be confusing cause and effect. As I see it we are reaching Global Peak Oil, The US is securing the last great reserves in the middle East to keep the status quo as long as possible. US dollar dominance feeds the military, therefore it protects it. (not the other way around)
These strategic relationships would have to be voided in order for OPEC to adopt a Euro standard for an oil bourse.
This is largely secret; do you have anything on this?
The U.S. sought to protect its dollar strength and hegemony by ensuring that Saudi Arabia price its oil only in dollars. To achieve this, the U.S. made a deal, some say a secret one, that it would protect the Saudi regime in exchange for their selling oil only in dollars.
Source. www.thirdworldtraveler.com...
When the dollar became the reserve currency for oil in the 80s, the dollar lost value as money was printed like crazy to compensate.
Cause and effect see - en.wikipedia.org...
If Europe had to print massive sums of money, this would likely lead to a severe devalue of the Euro as a currency in relation to other world currencys.
This would only happen if the ECB printed too much euros. If they print less then the price of the Euro would rise in relation to other world currency.
One problem though, that means those banks would be putting all their chips in with Europe instead of the United States,
maybe they want more choices. Do you know why major airlines company buys airplanes alternatively from Boeing and Airbus? Simple cause they know if they start buying from only one of them the price of individual airplane will rise. Can we apply this to US vs. Euro?
which means now Europe must back their currency or assume the risk.
The Euro is a FIAT currency just like the US dollar. Backed by nothing! (SSDP)
In 2005, the United States backed the dollar as the worlds reserve currency to the tune of a military budget of $663 billion dollars.
Much to secure the last remaining reserves and to protect the US dollar hegemony..
BTW, you might want to bring this up with the big boys:
Petrodollar Warfare: Dollars, Euros and the Upcoming Iranian Oil Bourse
