While the article by Petrov was mildly entertaining, his conclusions are based on cartoon economics. If he really has a Ph.D. in Economics from Ohio State University - then is just supports the fact that higher education does not equal higher thinking. The primary thing that one needs to really understand is that the U.S. is the world's largest economy. Lots of people don't like that fact, and dream up all kinds of reasons to hate the U.S. It's human nature to despise the successful and powerful - and that will probably never change. When the U.S. economy is no longer the largest, then things will definitely start to get very interesting. On a related note, it always amazes me how few people realize that the U.S. economy is based on inflation i.e. the Fed has an unofficial policy of creating inflation. During Greenspan's 18 year tenure, the U.S. dollar unofficially lost about 40% of its purchasing power. The U.S. economy will continue to grow as long as there is inflation and the country continues to promote unabated illegal immigration. Basically, intrinsic population growth is not sufficient to support the base of the economic pyramid. Regards, Slave2Market
Excellent Commentary ........................................................................ Actually the discussion is about demand supply issues... ......................................................................... Firstly it might be interesting to define what a super power is... A super power is a country whereby its public has a very high per capita income relative to its peers....and thus can create demand for goods and services....and the population is quite substantial... ............................................................................. If you have a country that has 225,000,000 people that have $4000 to spend every month...then it is economically 13x stronger than the same size country that has $300 a month to spend... If you create a situation whereby the $4000 per month country drops to a $3000 per month country...then its capability to spend has dropped 25% and this will effect all industries who sold previously to the $4000 per month country.... Now...if the $4000 per month country was replaced by another country who had 225,000.000 people whose income has grown from $300 per month to $1300 per month...Then the loss in demand is made up by the country which is improving economically.... Thus it is possible that a super power can lose ground...while other countries can gain ground....as long as they are not interlinked economically.... China ...Iraq...Iran....Venezuela...are all linked heavily to US DEMAND capability..... It is my opinion that the US is in a phase whereby there will be a gradual shrinkage in DEMAND which will be offset to some degree by other groups such as China...Brazil.... Look they have a long long way to go ....This move may look like China moving from $190 per month to $320...and Brazil moving from $260 to $400 monthly....with the US changing from $4000 to $3700.....over a long period of time.... ................................................................................................. Iran Issues Iran´s economy is not representative of a super power... Comparatively...the logic of Iran wanting to cause a per capita drop per person in the US would spell economic disaster for Iran....The majority of its revenue is OIL....Its economy is interlinked with that of the US....In simpler terms ...how is it rational for Iran to want to move its average per capita income from $300 to $200 per month....by moving the US per capita income from $4000 to $3700 ? Iran may behave irrationally.....but not for a long period of time.... ............................................................................................... The US OIL administraion needs to be replaced by a PRO Alternative Energy administration.... Irrational economic blips can be precipitated by irrational leadership of any of the OIL Welfare states.... In my opinion...it is irrational for the US to be PRO OIL... To be PRO OIL...you have to be PRO Iraq Iran Venezuela Russia Mexico Saudi Arabia...etc.etc... Get rid of this irrational PRO OIL administration....and complete the alternative energy mission....whereby there would be true economic gain...true increase in good jobs with longevity....the list goes on and on... The US needs a new PRO alternative energy industry administration...NOW !!!!! Irrational blips such as Iran can happen...and may have short run effects....This is why there is concern...however this US administration wants more control of oil by military means...which is irrational because of uncertain gains and lack of humanity.... Irrational because the approach does not help the change to the alternative energy needs of the US and the world....
OK, so if currency doesn't matter in trading commodities, then why the US government is so worried about it? Either they don't get the economics or those here who say it doesn't matter... Well, maybe this one will explain better: http://www.feasta.org/documents/papers/oil1.htm
Everything you always wanted to know about petrodollars, but were afraid to ask: http://www.ratical.org/ratville/CAH/RRiraqWar.html (weekend reading, rather long) If you still don't get it, well, then don't worry, be happy...
The notion that the USD will crash if Oil is priced in something other than USD is idiotic. ============================================= Commodities, like cash are fungible. Oil priced in USD or Euros or the price of Soybeans or the price of Palm Oil traded in Singapore makes no difference. In a fiat based currency world the value of one currency over another ultimately rises or falls on the FAITH placed in it by the users or holders of it. Modern currencies rise or fall ultimately on CONFIDENCE alone. Things that would make the USD crash: 1) Continued Federal spending beyond our means requiring continued bond sales at higher and higher interest rates, also requiring inevitable tax increases on a hollowed out economyâ¦.which will ultimately lead to #2 2) A repudiation of foreign held debt. (Aside: no civilization has ever truly repaid their debt. Historically, it's either inflated away....or simply repudiated entirely. i.e. demand for the USD would drop significantly Things that would boost the USD: 1) a simple flat/small tax. No VAT nonsense. With a Flat Tax....global Foreign Investment/ Excess Investment into the U.S. would explode. i.e. Demand for the USD would be beyond the capability to print it. It would also destroy the EURO whose members have no such option as a Flat Tax. Of course the Flat Tax is all predicated on a rational Executive and Legislative branch. Neither of which exist currently in America.
I guess this argument settles the issue forever. Thread is closed... But thanks for pointing out the misspelling, now I am getting way more hits on the Google searches. I always knew ET is good for something...
For those who think the USD will crash if somebody makes transactions in Euros: please give a reason. Nearly all the conspiracy theory about the Iranian Oil Bourse has simply asserted that if the oil is nominally priced in euros---then that's it. No other reasoning given. Please give an example how an oil future in euros is not equivalent to an oil future in dollars plus a euro/dollar forward. I think this has been debunked even by one of the people who originally suggested the Iranian Oil Bourse (I think it was somebody from the London IPE of all places).
Maybe Saddam's decision to write all those long term oil contracts in Euros was the real reason why they invented those Weapons of Mysterious Disappearance. All the other stated reasons have been proven to be lies.
Come on, Doc, I bet they teach reading in Harward. Well, maybe not, because Dubya didn't learn it, but I already gave 4 links, click on any of them. I gave them for a reason.... Try the last one, nice long reading for the weekend... OK, I won't be so cruel: "A move away from the dollar towards the euro could, on the other hand, have a disastrous effect on the US economy as the US would no longer be able to spend beyond its means. Worse still, the US would have to become a net currency importer as foreigners would probably seek to spend back in the US a large proportion of the estimated three trillion dollars which they currently own. In other words, the US would have to run a trade surplus, providing the rest of the world with more goods and services than it was receiving in return. A rapid and wholesale move to the euro might even lead to a dollar crash as everyone sought to get rid of some, or all, of their dollars at the same time. But that is an outcome that no-one, not even France or Germany, is seeking because of the huge effect it would have on the world economy. Europe would much prefer to see a gradual move to a euro-dollar world, or even a euro-dominated one. " -------------- "Semi-official confirmation that petro-currency rivalry was at the heart of the split between France and Germany, on the one hand, and the US, on the other, was provided by Howard Fineman, the chief political correspondent for Newsweek, in an article he wrote in April 2003, in the aftermath of the war. The Europeans and Americans were then arguing over whether the UN's oil-for-food programme in Iraq should remain in place or not. Using the term 'clash of civilisations' to describe the divide which was developing, Fineman explained that the disagreement had little to do with the French calls for the search for weapons of mass destruction to resume and for sanctions to remain in place until the search was complete. Instead, Fineman said, it was mainly about the dollar vs the euro. Citing White House officials and a presidential aide, he explained that the dispute between the two continents was really about 'who gets to sell - and buy - Iraqi oil, and what form of currency will be used to denominate the value of the sales. That decision, in turn, will help decide who controls Iraq, which, in turn, will represent yet another skirmish in a growing global economic conflict. We want a secular, American-influenced pan-ethnic entity of some kind to control the massive oil fields (Iraq's vast but only real source of wealth). We want that entity to be permitted to sell the oil to whomever it wants, denominated in dollars.' Fineman concluded his article by confidently predicting that future Iraqi oil sales would be switched back to dollars." See what I can find spelling correctly BOURSE???