Feds meet, USD up, PM,Euro down...quickly

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I would like to know more about the "Petrodollar" and what part it plays in making our money work. Excuse me for asking to direct me where in this informational link I can learn more. Thank-you

 

Petrodollar is a term to describe the US dollar as the world reserve currency. This was originally done when it took on the role of gold in the monetary world, but since then dollar dominance has been supported greatly by its world reserve currency status, because other nations had to swap their money into US dollars before they could buy or sell oil. More US dollars exist outside the US than inside because of this paradigm. It has enabled us to export a lot of our inflation to other nations who would otherwise not be using our dollars, and because of this many of the BRIC nations are moving, and have moved to bypass using the USD for the oil transactions. This does not bode well for inflation at home if we are no longer exporting it to other nations.

 

Are the BRIC nations succeeding? If so was the housing crash, shipping jobs overseas and the new creative financial instruments a planned response.

 

I do not think that the BRIC nations are going to make a run at being the reserve currency anytime soon, but these nations are not as forthcoming with their financial factors as the Euro-nations and the US. The BRIC currencies are not being exchanged as if they have strength. Watch these currencie, ( including the euro) the next time a severe crisis comes along. One would expect PM to be the fear-dollar, or one of the BRIC or Euro...but usually it is the USD that strengthens. It is the best house in a decaying neighborhood.

 

As long as the world runs on fiat (only for the last 41 years), then the USD will be the reserve currency. The US Military absolutely guarantees that anyone with $102, as I type this, can buy a barrel of oil from any oil producing country. That's it in a nutshell. Any country that threatens this either gets bombed back to the stone ages and/or is isolated as part of the "axis of evil".

This is why any oil producing country not friendly to this situation can't have an atomic program (Iran, Iraq, Libya, etc,) and why they don't care about other countries whether they are extreme or not. (Brazil, Pakistan, even N. Korea can have the bomb). The atomic bomb is the great equalizer. It only takes one tactical nuke or nuclear torpedo to completely eliminate a ground invasion or a flotilla of ships. And this is using 1950s technology.

In effect, the USD is the only asset backed currency in the world (oil) and every country knows this. While they might talk about creating alternatives, go look at their central bank balance sheets. Of course the Europeans, led by the French, never liked or accepted this situation and moved to create the Euro. But as people have quickly discovered in the last couple of years, without a big gun to back up the words, the Euro is falling apart. It's the reason the UK never joined the Euro because more than anyone else on this planet, the BOE completely understands how this works.

The big lie is that fiat is supported by nothing more than the "good faith" of the government that issues it. The reality is that fiat is valuable only from the issuer with the biggest gun who will use that gun to insure their currency can buy resources in a world short of resources. This is why I laugh at the notion that Chinese money will become the next world standard. Nobody trusts the Communists and any bankster with a vault full of Chinese Renminbi is having sleepless nights as they know they are only one revolution away from it being nothing more than colored paper.

 

Ugg - No emotionalism here, that is for sure.

 

Really, can you expand on this. I find it fascinating.

 

Do you ever talk about coins?

 

They are succeeding in bypassing use of the USD for oil transactions, through either bilateral currency agreements or using gold. This does not mean any of them will supplant the USD's role as the world reserve currency, only that the benefits we have because of it will be diminished as they are not participating in the paradigm.

One could make the argument that shipping jobs overseas was a planned step toward globalization, and that the USD as the first world reserve currency could have been an incremental step toward a true global currency taking precedence over nation states as a step toward global government, since who controls the money controls the policy of a nation arguably. The US is the only nation in the world that I am aware of where gun ownership is explicitly protected, so it makes sense that the USD would be used to push the concept to the rest of the world first instead of trying to tell the US to adopt another currency superceding the Constitution. At this point the global economy is dependent upon this system and it would be a straight forward swap to replace the USD with a new global currency just like it was to swap gold for the USD in 1971.

 

When I spoke to the Saudi Ambassador yesterday they said that they agreed to take all the Presidential Golden Dollars and Saqawega Golden dollars ONLY for oil transactions, but canada only takes Loonies.

Ruben