What happens if Euro becomes primary oil trading currency? nothing... apart from the initial reaction of panic from the guys who normally lose money anyway... thing is what do you do with the cash? u reinvest it... if there was a marked preference for investing oil etc proceeds into european-based / denominated assets vs US ones we would have noticed already...
I think we mean the same thing, ie: a. oil is $70. USD goes down 10% in relation to Euro. b. oil corrects to $77 as USD is worth less. so: c. Euro holders are not paying any more for oil as a result. Since US and Chinese currencies as well as economies are so closely linked, if there is a drop is buying power of these currencies, then demand will slow as oil gets too expensive. In the end, Euro gets at worst oil that doesn't rise in price. Why EU doesn't want oil in Euros: Instead if the reverse happens -- oil trades in Euros, then oil gets too expensive (for US and Chiina) if the dollar continues weakness. Inflation reigns king in US and China, and we continue to export at a record pace to Euro. They're buying power increases, but they hit record trade deficits just like us - Inevitably leading to reduced investment from US/China/etc, thus causing recession ? Oh.. this is all incredibly complex.
a simpler explanation is that Europe knows that for chronical reasons its investable asset base is relatively unattractive compared to the US investable asset base... they'll look ridiculous once it becomes obvious that the majority of the proceeds of oil sales in EUR get converted in $ to acquire US assets...
I've noticed in the past week fewer and fewer gas stations are accepting dollars. Last night I passed a half dozen filling stations in Palm Beach County, all with prices quoted in EUR with hand painted signs saying NO DOLLARS PLEASE!. I called American Express and they offered to convert my dollars at 163.17 EUR. I gladly accepted as I was running very low on fuel. The thing that really pissed me off though was in Boca Raton some raghead operator told me that he'd sooner take rupee's or yuan's then my "worthless, fiat dollar". He did however allow me to buy a Mountain Dew and bag of Frito's with the spare buck that I had in my pocket. I really hope we get this dollar thing worked out.
LOL, nice one. In regards to dollar devaluation, I suggest to take a look at the fall of the pound decades ago. It devalued by over 50% over the time and it is not a quick process but a long and tedious one. There are key differences and I think US will hit a major recession/depression because of the over inflated assets. 3-4 years is my guess. Then there is the whole world scenario of fiat currencies going down the toilet. After all, printing money as a source of wealth does not work forever.
I agree with everything in your post. IMO though USD, EUR, JY, etal will lose purchasing power equally to the uber currency of commodities.
I concur - but I'll go a step further and say specifically I think energy sources (ie oil/uranium), as long as there are supply limitations, will reign supreme, not gold/silver/etc. (in the long term at least) Whatever has a practical use will do well. Gold has very little practical value. I just don't see it as being a good long term hedge against fiat currencies.
am thinking of issuing oil coupons and launching an e-oil payments site... storage's a problem though... anybody could recommend a cheap land mass close to a major shipping & financial hub or sthg... ya know one of those things fiat money makes possible