If OPEC drop the dollar, then what will happen to the American Economy?

[Krome]

One of the reasons Bush went to war with America was to stop Iraq trading oil in Euros. The European Union is pushing for the dollar to be dropped and replaced with the Euro and most big oil producing countries support the change.

What will happen to the American economy if the dollar is replaced by the Euro?

[RawAlex]

The dolllar price of oil has had some very amusing effects around the world, and I think that the US haters aren't going to be in a rush to change how the price of oil is calculated any time soon.

I am in Canada. As the price of oil has risen more than 100% in 3 years, you would expect that our pump prices would have gone up similarly. However, because the exchange rate between the US and Canadian dollar has gone from 1.60 5 years ago to effective 1.0 today, the price increase for oil in Canada has been less than half.

Keeping oil priced in US dollars when the US dollar is down makes the cost in economic terms inside the US very high, but doesn't impose the same costs on other nations. Thus the OPEC countries don't have to face an upset Europe because the cost of oil when calculated in Euros hasn't moved anywhere near as much (went from .90 to 1.37 in the last few years).

Surging oil prices are hurting the US way more than any other country, and many it the world think that is just fine.

[Saguaro]

Ah, but dear Canada ,what will happen when we no longer are able to protect your air space ?

[RawAlex]

Sorry, I don't follow. We don't have any issues protecting our airspace.

[Bill]

It's oddly comforting to know other countries have a reason to stick to the pretrodollar.

[Punchie_of_the_North]

The BIS are the real know it alls when it comes to this stuff
http://www.netscape.com/viewstory/2007/07/02/another-great-depression/?url=http%3A%2F%2Fglobalresearch.ca%2Findex.php%3F context%3Dva%26aid%3D6209&frame=true

[Krome]

It's oddly comforting to know other countries have a reason to stick to the pretrodollar.


The peoples view is irrelevant when it comes to the profits of petrol companies.

[Bill]

The peoples view is irrelevant when it comes to the profits of petrol companies.

You think the oil companies have a reason to move to the petro-euro or the petro-yuan?

If they did, then it's probably "goodbye american economy".

[Krome]

You think the oil companies have a reason to move to the petro-euro or the petro-yuan?

If they did, then it's probably "goodbye american economy".

Hearing talk from the head of the European Union and Oil companies wanting higher profits yes I do think they are pro Euro. However, I cant see American based oil companies going for it as it is in their interest for the dollar to not drop any further.

In my opinion the dollar will be replaced by the Euro within the next 5 years however I think it will be more about regional replacement not the whole trading of oil worldwide.

[moonman]

A couple weeks back Kuwait announced that it would no longer USD's for oil. In the past two months China has moved a tad over 10 billion out of USD's. China is expected to reduce its holdings of USD's at a rate of 5 billion or so per month.

Krome's question, what will happen to the US economy if everybody quit taking the USD's is pretty simplictic. Don't worry about it, it won't happen. At least in the sense we wake one morning and nobody outside the US will accept USD's.

What is happenning is that many countries are gradually moving away form our dollar. Frankly, this is a good thing long term but will be very painful short term.

The USA represents roughly 30% of all trade in the world. We still generate 25% of everything produced in the world. What is going on is that as other economies mature, Europe & Japan and still others develop, China & India, those currencies will take on ever greater significance in trade.

So nations moving out of USD's is part natural occurence which is healthy and in larger part fear which is not healthy. For the world or for the USA.

According to our Fed, there are somewhere between 650-700 billion USD's in circulation around the world. The US Treasury has just petitioned Congress to increase our debt ceiling again to about 9.5 trillion dollars. Take a peek at your USD if you have one or some in yer pocket. It says 'legal tender for all debts public and private.'

Now we are or will soon will be over 9 trillion dolalrs in debt. We have less than one dollar printed for every of 11-12 dollars of debt. As the calls come in to redeem the debt our Treasury will simply print more USD's. This childrens is inflation.

For reasons I won't go into on my first post, I expect the continuing pressure on the USD to reach a crisis point this October. The first of many actually. Enuf to say we have entered what will soon be called the Greater Depression. We are roughly, economically speaking, where England was in 1945.

The short answer Krome is we're toast. The long answer is that you'll never make a buck betting against the American People.

[Punchie_of_the_North]

. . .never made a buck betting against the American People? It rings true, because all the evidence points to it; on the other hand, 9 trillion in debt, has to have consequences. The conscious mind boggles at what those might be . . .

[moonman]

. . .never made a buck betting against the American People? It rings true, because all the evidence points to it; on the other hand, 9 trillion in debt, has to have consequences. The conscious mind boggles at what those might be . . .

G'day Punchie,

Being a Cannuck I'm surprised you wonder at all. Maybe yer not a Boomer but part of Generation X or Y. If so, maybe yer parents didn't tell you.

The Trudeau Gubment ran up huge deficits in the 1970's roughly proportional to what Bush has done to us. When Mulroney was elected in the 80's he tried for two years to cut spending by reducing Canada's social safety net. It was a huge debate and the Conservatives were unsuccessful. Deficit spending continued.

Then in the 90's Chretien came to power and like that great fiscal conservative Bill Clinton, Chretien produced ten years of balanced budgets. As a result of both Bush deficit spending and Chretien restoring fiscal integrity to the Canadian system, the loonie has bounced back.

That's the history in a nutshell Punchie.

As you apparently live in Canada and perhaps remember well how bad the 80's & 90's were, perhaps you can tell us here in ths south what to expect as our dollar collapses.

I know it's almost blasphemy to smack Trudeau. Fact is, while he was a brilliant legal scholar; the guy couldn't balance a checkbook to save his life, or that of his country.

[Moby]

When Dubya was elected I made a couple of obvious predictions and so far I've won dollar bills from many of my conservative friends that thought Dubya was a conservative himself.

1. We will invade a country (probably Iraq) and declare victory the summer before the 2004 election and it will be the only campaign issue of importance. (we declared victory a few weeks before summer started)

2. Gasoline would hit $3.00 before he left office and that oil companies would see record profits.

3. We would increase the size of government, governments control on commerce and individuals by a large amount (I think we've had the biggest increase in history)

4. We would see record debts and around 2008 to 2010 we will see a huge economic collapse and more people will lose their homes and jobs then ever before. (It looks like the collapse may start before 2008 but I'm close)

5. Most conservative voters will still believe that the Republican party stands for keeping government small, responsible spending, not regulating business, stay out of lives and most of those things that they accuse dems of doing.

[Punchie_of_the_North]

I remember Pierre Trudeau. I was in the boardroom of the Edmonton Chamber of commerce during the reading of the Al MacEachan budget and National Energy Program. That was Pierre Trudeau balancing a checkbook.

Canada's debt rose under the inflation of the early 80s and went quite high. Mulroney took serious measures to correct it, the GST included.

Debt in Canada remains high. Alberta the oil province is alone in ending the deficit spending.

Debt in Canada remains no better than the US, except now everybody talks about the US. We probably have over 2 trillion in debt all governments counting.

I don't think it is a threat to personal property. It is a threat to national wealth and world image. And in my experience, when somebody has a debt, somebody else comes to collect.

Canada did a tremendous amount of service to debt by following the lead of Quebec, a province that owns the massive Caisse de depot du Placement du Quebec, also known as the Regle du Rente du Quebec RRQ also known as the Quebec Pension Plan.

Interesting story, this CDPQ is the province of Quebec ruling over Civil Law in the collection of pensions since 1966. While the other Canada, English Canada, also set up a pension fund called Canada Pension Plan, the Quebec fund alone invested the funds and became rich, while the Canada Pension Plan was spent on Canadian infrastructure, UNTIL, the late 1990s.

The Paul Martin finance department and subsequent minority government created an investment portfolio out of the CPP and now it pays down debt owed by the CPP for previous infrastructure loans (non-returnable, mind you)

[moonman]

I remember Pierre Trudeau. I was in the boardroom of the Edmonton Chamber of commerce during the reading of the Al MacEachan budget and National Energy Program. That was Pierre Trudeau balancing a checkbook.

I don't think it is a threat to personal property. It is a threat to national wealth and world image. And in my experience, when somebody has a debt, somebody else comes to collect.(Emphasis added)

Like I said and Punchie confirms, you write any smack about Trudeau and Canucks get their panties in a bunch. I don't believe Trudeau balanced a budget in any of his 15 or so years in office. Punchie refers to a proposed budget and not fiscal year end.

Hey Punchie, what and who do think they will tax or confiscate to pay the debt? Duh!!!

[Punchie_of_the_North]

I agree completely that Pierre Trudeau was the ultimate iconoclasm for Canada, you have my vote on it entirely. As for what will they collect? I hear there's a bridge for sale in Minnesota, you sound like a guy shopping for a bridge. (No disre:banghead: spect intended for the missing and departed or their families)

[Punchie_of_the_North]

D'Moonman asks, what are they going to collect for the debt? I stood in a room and listened to Jean Chretein say, "Bud we are only borrowing from ourselves," and when the logic of it was played out over his lifetime, turned out, the man was 'spot on' with the fancy ciphering. Debt isn't necessarily doom if it is managed. On the other hand, what if debt is something we don't want to immediately perceive? What if debt is like death and we simply refuse to think about it because it is entirely other and not happening now and when it happens it is over anyway.

Hold on, people. That is a selfish way to consider debt. You leave nothing for children and next generations to look forward to, by spending up a legacy. I think the Russian royal railroad building spree is demonstrative of what happens to industrial powers when they overspend and don't pay. The authority collapses and the debt collectors begin to rule.

[moonman]

Now yer talkin' out both sides of yer mouth Punchie. And it only took one post, lol.

yeah, the debt collectors rule alright. Since you lived through a currency devaluation, I thought you might have had something to offer other than academic insight. Back to yer books junior, I prefer people who live with eyes wide open and the smarts to understand what they see and experience. You obvioulsy have neither.

BTW, on the Board of local Chamber were you? How freakin' impressive.

[Punchie_of_the_North]

Nah, I was an employee under the board at two different boards of trade in Canada, Edmonton in 82 and Regina in 86, wherein I ran their newspapers. But don't you think, moonmadman, perhaps, since we are talking about money, deception could be involved? After all, it's nothing but PAPER man

[Punchie_of_the_North]

It's the name, isn't it? It just makes people want to shoot first and second and third.

[Punchie_of_the_North]

nay, you are the moneymonger a la carte, tell us, savant, why the 1,500 percent inflation in Zimbabwe? And what cause arbitrage, anyway?

[moonman]

The dolllar price of oil has had some very amusing effects around the world, and I think that the US haters aren't going to be in a rush to change how the price of oil is calculated any time soon.

I am in Canada. As the price of oil has risen more than 100% in 3 years, you would expect that our pump prices would have gone up similarly. However, because the exchange rate between the US and Canadian dollar has gone from 1.60 5 years ago to effective 1.0 today, the price increase for oil in Canada has been less than half.

Keeping oil priced in US dollars when the US dollar is down makes the cost in economic terms inside the US very high, but doesn't impose the same costs on other nations. Thus the OPEC countries don't have to face an upset Europe because the cost of oil when calculated in Euros hasn't moved anywhere near as much (went from .90 to 1.37 in the last few years).

Surging oil prices are hurting the US way more than any other country, and many it the world think that is just fine.

The collapse of the USD is the issue Raw Alex. Rising oil prices is a symptom. There seems to be genuine price support for the USD at .80 per the index. The real crisis will come in October when it slips below below 80.

Amusing? The USA is 30% of all world trade and we generate 25% of everything produced in the world. Do you actually think as we go down that Europe, Japan, China & India or even the lesser lights like Brazil & Canada are self-sustaining economies?

The USD crisis is not the USA catching a cold and Canada and the rest of the world coming down with pnemonia, as the old metaphor states. The USA has contracted pnemonia. You will soon be on life support, if you can keep it powered up.

We made a huge mistake in electing or depending on yer POV, allowing Dubya to steal the Presidency. We will pay for this mistake for at least a generation, if our Republic survives intact. Frankly, I have my doubts.

[Punchie_of_the_North]

MOONMAIDEN: I don't know what you're saying, BUT THAT'S MORE LIKE IT!