why must oil exporting nations peg their currency to the dollar?

Discussion in 'Economics' started by nooty, Apr 27, 2011.

  1. According to the IMF, Libya’s Central Bank is 100% state owned. The IMF estimates that the bank has nearly 144 tons of gold in its vaults. It is significant that in the months running up to the UN resolution that allowed the US and its allies to send troops into Libya, Muammar al-Qaddafi was openly advocating the creation of a new currency that would rival the dollar and the euro. In fact, he called upon African and Muslim nations to join an alliance that would make this new currency, the gold dinar, their primary form of money and foreign exchange. They would sell oil and other resources to the US and the rest of the world only for gold dinars.

    The US, the other G-8 countries, the World Bank, IMF, BIS, and multinational corporations do not look kindly on leaders who threaten their dominance over world currency markets or who appear to be moving away from the international banking system that favors the corporatocracy. Saddam Hussein had advocated policies similar to those expressed by Qaddafi shortly before the US sent troops into Iraq.
    #11     Apr 27, 2011
  2. sjfan


    Hasn't he been calling for this kind of stuff since the beginning his reign?

    The amount of conspiracy theories ET is amazing.

    #12     Apr 27, 2011

  3. www.globalresearch.ca and a few other sites have articles providing the same comments... The rise of Islamic banking has offended many well placed people as well..
    #13     Apr 27, 2011
  4. I hope you all understand that the instant oil trades in any other currency besides the $ the US collapses. The only thing saving us is our military and our printing press. We will use what ever force necessary to ensure the dollar remains the reserve currency and any threat will be dealt under executive order as a matter of national security.

    The Chinese and Indians know how to play our game and protect their interest. Their currencies only float at the rates established by their governments. Our polidiots can try to strong arm them but I doubt they will flinch. India was subjected to US sanctions until 2000... paki's only play along for the economic aid we provide.

    We will never go into a 3rd world country unless our dollar and / or corporate interests are under threat.

    IMF & World bank are really US controlled organizations because we hold veto power. SDR's will be made available on a limited basis by IMF to allow banks to settle across borders and effectively create 2 currencies. the $ used by people and printed out of thin air and the IMF SDR's that are only tradeable by licensed banks backed by gold or whatever resources set by IMF/USA.

    #14     Apr 27, 2011
  5. nooty


    Can you explain that further please?
    #15     Apr 28, 2011
  6. sjfan


    Okay - say the Saudi oil is now traded only in freely floating $SA. So, to buy oil, you need to first buy $SA with dollar, euro, or whatever. So, there's a constant demand for $SA vs other currencies in order to buy oil. So, $SA will be a very very strong currency.

    Now, suppose Libya is willing to sell oil in dollar. As $SA rises against the dollar, Libyan oil becomes much cheaper than Saudi oil for dollar denominated buyers (same for euro or RMB denominated buyers). So everyone flocks to buy Libyan oil at the expense of Saudi exporters.

    Okay - fine - you say - what happens if all of OPEC somehow agrees to only sell oil at $SA or Gold coins or OPEC Credit.

    Leaving aside coordination problems, let's say that's works - except - you can't buy food or mercedes or stays at Hiltons or prostitutes (because those providers don't want to be paid purely in oil credit; their costs are in EUR or Dollar or whatevers).

    So here's the big problem: when oil prices crash, so does the value of $SA/gold coins/OPEC credit. So all the sovereign wealth that flowed into OPEC now translates to far less purchasing power. And since most OPEC countries require imports to survive, it's a huge problem.

    They get hit with both less income and less purchasing power at the exact same time.

    This is why OPEC is happy to sell oil in dollar. It lets them keep their money.

    #16     Apr 28, 2011