Euro Euro bill yo!
Petrodollars seem to be as unfashionable to OPEC members as regular dollars are to rappers and supermodels.
The hardline Iranian leader’s comments also highlighted the growing challenge that Saudi Arabia, the world’s largest oil producer, faces from Iran and its ally Venezuela within the Organization of Petroleum Exporting Countries.
“They get our oil and give us a worthless piece of paper,” Ahmadinejad told reporters after the close of the summit in the Saudi capital of Riyadh. He blamed U.S. President George W. Bush’s policies for the decline of the dollar and its negative effect on other countries.
Is the US dollar at the crossroads of a perfect storm? Trillions owed to foreign nations in debt, credit crisis at home and OPEC considering dumping dollars for Euro’s. Since the US dropped the gold standard and went to a floating currency, it was the credit of the nation that was the “backing” of the US dollar. Well, that credit is vanishing quicker than ever. Petrodollars may be the next to go. For those who want to read about petrodollars, check this article from my favourite purveyor of gold buillon. BTW, I bought at 324. How about you?
You realize that we really had no option other than dropping the Gold Standard, right? There just isn’t enough gold out there.
And it wasn’t just the credit of the US that is backing it. It is the full “faith and credit” and that faith includes a government that has been stable for a couple of hundred years and the largest, most powerful military the world has ever known.
Pretty damn good bank guards.
1,
Well, if fractional reserve works on faith and credit, why not gold? AND, I believe it was just after France asked from some money in gold form that the US swapped.
BTW, can we then remove the “faith” in terms of stability and credibility of government? You still have the military, but they are not fighting standard wars any longer.
bouillon=broth bullion=gold
just sayin’
3,
Fixed that for ya! (thanks!)
#2 “You still have the military, but they are not fighting standard wars any longer.”
But we can and we are really much better at it. Nor is anyone else any better at the non-standard ones either.
What’s this faith and credit for? You have a dollar bill, it is worth a dollar. If the government keeps printing more dollars, your paper drops in value.
By the way, if there is trillions owed by the government in outside debt, then crashing the dollar makes it easy to repay that debt.
Cry, liberal, cry.
6,
Not if the the foreign debtors want payment in full, and do so by returning the T bills they hold. What is the US going to do when trillions of T-Bills are returned?
#8 – Not pay a damn cent, since they can’t make us by force.
Welcome to the real world, junior.
A good many people I know keep wondering if I have any gold? What? Are they wanting to sell me some? NO! They want’ to see if I was as gullible as they buying a single coin just to say, “Hey! I invested in gold!”
I have silver, the poor-man’s gold.
Not if the USA follows the example of Argentina and Brazil in the 70s and 80s. China could very easily find itself holding a zillion worthless IOUs.
Or to put it another way, if you owe the bank $10,000, you’ve got a problem.
If you owe the bank $1,000,000,000,000, the bank has a problem.
12
That’s an old saying that doesn’t completely translate into foreign debt. True, the US foreign debt is a problem for China (and other lenders like Japan and Argentina) but they are hedging their forex risk to cover potential losses – which is self fulfilling cycle of reducing the US $. Also when the US state department tries to press China on trade issues or arms buildup they will have absolutely no leverage.
Overall though it means a loss of economic confidence in the US which means less foreign and domestic investment – bad news for growing businesses and people who want jobs. On the plus side, companies like Infosys are offshoring jobs to the US.
9,
France did the same thing to the Dutch years and years ago. It’s nothing new. BUT, debt re-payment is a mantra of the US banking system. Of course, spun the right way, anything is a positive. Try teaching me something new next time.
10. I have silver too. Made a much, MUCH better return on it than gold, and far quicker too. Kitco has great services. CHeck it out!
#8, you’re missing the point.
This keeps getting repeated by people with talking point that other countries holding all this debt is a problem.
Well let’s say they come in and demand payment on a trillion dollars of t-bills.
First of all t-bills have specific payment schedules, so they’ll be ignored. Besides that, the payments are to be made in DOLLARS. So a dollar with less value is easier to repay.
The government could just print out another trillion dollars in bills too.
The problem of foreign holders cashing in would be a problem if they demand gold in return, which is no longer being used by the US.
So the trillions of dollars in outstanding debt is not a problem for the US.
What is a problem is the current deficit, and more the future deficits in the budget.
15,
Just print out more trillions? And that would help out how?
I hope no one thinks this has anything to do with the two trillion dollars we’ve thrown away on the Iraq war.
At #8: Indeed welcome to the real world…
Some examples: if an American’s house defaults, some foreigner might walk in and buy it off his bank because to the foreigner, that house is only worth 100,000 €…
We’re not at the houses yet, but it’s already starting with companies: Lenovo bought IBM’s PC division, Huawei bought all of 3com, …
The US is being bought from under our asses already!