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Iranian Oil Bourse - The ultimate nuclear weapon!!!
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| habsfan |
| quote: | | The Iranian government has finally developed the ultimate “nuclear” weapon that can swiftly destroy the financial system underpinning the American Empire. That weapon is the Iranian Oil Bourse slated to open in March 2006. It will be based on a euro-oil-trading mechanism that naturally implies payment for oil in Euro. In economic terms, this represents a much greater threat to the hegemony of the dollar than Saddam’s, because it will allow anyone willing either to buy or to sell oil for Euro to transact on the exchange, thus circumventing the U.S. dollar altogether. If so, then it is likely that almost everyone will eagerly adopt this euro oil system: |
Hmmmm, has all this nuclear talk been a distraction?
http://energybulletin.net/12125.html |
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| Lepanto |
ING DAMN YOU!. :p
I was about to post this.
Anyways, i heard about this on the JV and Elvis radio show and they were asking people to call in and talk about the war and so on and so forth. So one dude called in and said that the reason is to protect the American dollar in foreign countries who use it to buy oil and if they revert to euros the currency will come back and cause inflation or some .
Anyway, this won't do as much harm as they make a big deal out of it. Who says everyone is going to adopt the euro system? LMAO. Euro is unstable and due to the fact of all the economical problems going on in Germany France and so on it's not a solid currency to revert to. Especially with all the problems that the E.U. have been having. |
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| habsfan |
lol, actually the Euro hasn't been doing too shabby lately. The US dollar, on the other hand, isn't doing so hot.
| quote: | | From a purely economic and monetary perspective, a petroeuro system is a logical development given that the European Union imports more oil from OPEC producers than does the U.S., and the E.U. accounted for 45% of exports sold to the Middle East. (Following the May 2004 enlargement, this percentage likely increased). |
| quote: | | Despite the complete absence of coverage from the five U.S. corporate media conglomerates, these foreign news stories suggest one of the Federal Reserve's nightmares may begin to unfold in the spring of 2006, when it appears that international buyers will have a choice of buying a barrel of oil for $60 dollars on the NYMEX and IPE - or purchase a barrel of oil for €45 - €50 euros via the Iranian Bourse. This assumes the euro maintains its current 20-25% appreciated value relative to the dollar – and assumes that some sort of US "intervention" is not launched against Iran. The upcoming bourse will introduce petrodollar versus petroeuro currency hedging, and fundamentally new dynamics to the biggest market in the world - global oil and gas trades. In essence, the U.S. will no longer be able to effortlessly expand credit via U.S. Treasury bills, and the dollar's demand/liquidity value will fall. |
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| Lepanto |
| The USD is stille fine however are you going to trust a currency that keeps jumping all over the place like the Euro? |
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| habsfan |
Here's a pretty good explanation from some guy on another forum:
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Most currencies in the world these days are "fiat currencies" where the issuing government can print as much money as they want ("currency by fiat") Accordingly, the value of these currencies float relative to each other based on supply/demand and perceived value, just like corporate stock (although corporate stock represents a share of ownership, where currency does not)
The big problem with fiat currency is inflation, becuse the more money you print, the less it is worth. You can't just create value out of nothing.
( Mind you, there were problems with having the currency hard-backed with gold as well - notably, you could get "currency shortages" (if there isn't the gold to back it up in the reserve, you can't print money, so you could wind up in the situation where you couldn't get a bank loan because there literally wasn't any money for the bank to lend to you) I'm no "gold bug" who will argue a return to currency explicitly backed by precious metals)
The interesting bit of analysis out of that article is the observation that the US Dollar is *effectively* backed by oil, due to the need to buy oil with US currency. (Assuming that that's actually true - I haven't fact checked it)
That's a very convincing point, to the effect that a little "click" went off when I first read it. Suddenly, a whole lot of very stupid behaviour by a whole lot of intelligent people starts to make sense....
Currencies aren't like engineering units, where you can convert losslessly from one to the other, like metres to feet. If somebody will only accept a certain currency for a product, then someone who wants to purchase that product must first purchase that currency. Modern banking systems streamline the process a great deal, such that most of the mechanics are hidden, but every time you buy a product from a foreign country, a currency transaction takes place somewhere.
Because the various world currencies float relative to each other, the value of the currency is subject to the laws of supply and demand. As demand grows, the price of the currency increases. As demand drops, the price of the currency decreases. Similarly supply - as the government prints more money (increases supply) then price of the currency decreases.
A government whose currency is in high demand can print more money and keep the price (or value) of the currency constant - meaning, in effect, that there is more wealth floating around, because there is more money out there and the face value has remained the same. You get to print more money without creating inflation, because the inflationary aspects of printing more money are offset by the increased demand for the currency in order to purchase oil.
And the more money there is floating around (where value has remained unchanged by the extra supply) the richer the country is. If you create demand for your currency, you quite literally create wealth out of nothing.
Now the traditional way to increase wealth is to create demand for products sourced from your country. If my country produces an excess of food, or raw materials, or manufactured goods, other countries will want to purchase those goods. That creates demand for the currency used to purchase those goods, which increases the value of that currency, which in turn allows the printing of more money. As manufactured goods carry a price premium over raw materials (due to the added value of manufacture) a country that does a lot of manufacturing and export creates a lot of demand for its currency. At one time (especially during WW2, where the US was arming and feeding most of the Western world) this was THE major engine of US wealth.
But as globalization and the increasing standard of living in the US has driven the costs of manufacturing in the US exessively high, those manufacturing processes have moved elsewhere, lowering demand for US currency. That in turn lowers the value of the US Dollar, and leads to inflation.
BUT - OPEC will (so it seems - as I said, this is the central fact that must be checked) will only accept US currency in exchange for its (cheap and plentiful) oil. This creates demand for US currency independant of any US contribution to the value of the product. This demand is completely artificial - the more oil coming out of OPEC, the higher demand for US currency, the more US currency is worth, the more money that can be printed while keeping the price of the dollar constant. This is effectively "free money" for the US for doing absolutely nothing. And because oil is in such high demand, it is a LOT of free money.
But it also means that anything that threatens to bypass the requirement to buy oil with US currency threatens the value of the currency itself - especially as the US is no longer the manufacturing powerhouse it once was. If it became possible to buy substancial amounts of oil with, say, Euros, then demand for the US Dollar would drop, and each dollar would be worth less than it was - hello, inflation! And given that the oil-related demand for the USD is THE major engine for propping up the dollar, given the absence of huge exports to create alternative demand for the USD, it is no stretch to say that the USD is "backed" by oil.
(Who'd've thunk Greasy Pete's economics classes would take, huh?)
So anybody who threatens to put large, CHEAP oil reserves on the market and who will take currency other than the US Dollar is materially threatening the US, because they could trigger runaway inflation and the eventual devaluing of the USD. Imagine if your house was suddenly worth $20,000 instead of $200,000, or if a loaf of bread cost $10.....
And Iraq has oil reserves estimated to be equal in size to Saudi Arabia, has crushing debts (mostly related to the Iraq/Iran war of 1980-1988) and no signifigant exports save oil and dates. A Saddamn willing to sell oil in Euros at prices that undercut OPEC literally threatens the ecomomy of the USA.
*click* And now the war on Iraq makes PERFECT sense.
And now we effectively have Iran saying/doing the same thing, and now all of a sudden Iran is the next great Satan.
And what is the background of the Bush family (and most of the people in power in the US right now?) Oil.
Things that make one think.....
Yes, Canada has huge reserves in the oil sands, but the economics of extracting that oil are such that Middle Eastern oil is cheaper to produce. It's not so much the *amount* of oil that counts, as how *cheap* it is. But I wonder - once the "easy oil" from the Middle East is gone, or if a major breakthrough occurs that makes Alberta oil as cheap to produce as Middle Eastern oil (meaning we could flood the market and drive the price down, plus take payment in our own currency) would we find ourselves in the sights of the US Army?
Yes, China has huge reserves of US currency and US debt, and I suspect they would not be too keen on having that devalued. But I also suspect that they could weather that storm better than many other countries.
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