oil in euros

[deereman64]

Some time ago I had written about the added dimension to the increase in oil prices and that was the possibility that producers would look to receive payment in a basket of currencies. I know that the call at OPEC came from the "lunatic fringe", but the response was not an emphatic no. The others dont want to devalue their current holdings, but going forward I think you will see more funds being diverted to national investment funds where the economists rather than the politicians will make decisions as to the currency mix.

Up to now importing oil was not a distinct leak to the economic cycle in the US dollar payments was offset by the return of these dollars to US in the form of financial investments. We dont have large currency reserves as there has never been the need. We do have large gold reserves and they may have to be used to plug the gap. The sale of the family jewels. The alternative is to get to grips and refocus, make serious political decisions and redirect our considerable energies and intelligence in really protecting our great country

 

[Z-Michigan]

Another alternative is to liberate Venezuela...



From OPEC's perspective I think the basket of currency approach is quite sensible. It is bad for the US, of course, and I am pleasantly surprised that within OPEC only Iran and Venezuela seem to be strong proponents of this change. But political ties will only hold so long. I for one think that advanced biofuels and some other synthetic petroleum technologies are the best bet for the US in the short to medium term.

 

[YanmarFever]

Some time ago I had written about the added dimension to the increase in oil prices and that was the possibility that producers would look to receive payment in a basket of currencies. I know that the call at OPEC came from the "lunatic fringe", but the response was not an emphatic no. The others dont want to devalue their current holdings, but going forward I think you will see more funds being diverted to national investment funds where the economists rather than the politicians will make decisions as to the currency mix.

Up to now importing oil was not a distinct leak to the economic cycle in the US dollar payments was offset by the return of these dollars to US in the form of financial investments. We dont have large currency reserves as there has never been the need. We do have large gold reserves and they may have to be used to plug the gap. The sale of the family jewels. The alternative is to get to grips and refocus, make serious political decisions and redirect our considerable energies and intelligence in really protecting our great country

I dont think our money is backed by gold anymore, I also think our government sold the family jewels (gold)a long time ago !

 

[JSharp]

Our money hasn't been backed by gold for years. The reason it's dropped so far in value in the last few years is because the Federal Reserve just keeps printing more.

It's simple. Increase the "money supply" with a printing press and then keep the economy "healthy" with low interest rates and borrowed money, and you'll see your money get to be worth a lot less.

In spite of the lies told by the government about low inflation, if the Fed continues we'll be looking at a dollar that resembles the German Mark pre-WWII.

So oil or gold or any number of other things haven't really increased in price or value. You're just buying those things with a dollar that's worth about 1/2 as much to the rest of the world...

 

[Red55]

Exactly what I told the wife the other day! If we could sell our house it is worth exactly what we paid for it 14years (in real 1993 dollars) This stuff is starting to look like play money. One of those get rich quick guys (think Rich dad, Poor dad) had said that money is designed (by gov) to be worthless in 40yr cycles. Think the gov is acclerating the cycle? -Ed

 

[deereman64]

Sorry to have confused. According to Wikapedia as of Dec 2006 the US held 8,133 tonnes of gold, about 2 3/4 times the next largest holding by Germany,
and your'e right the US currency is not backed by gold.
However, and there was an example of this during the early 80s' when the GSA auctioned off some of the gold holdings, gold does form a part of country's reserves and can be used as a source of payment for goods and services.Its not very efficient but can be done. The disadvantage of gold is that it doesnt earn interest so essentially lies there doing very little.

Other question has the government devalued our currency and is this contected to our domestic inflation rate? A very complex question, but if you want a quick answer, IMO relative to the rest of the world then the US has done reasonably well. There are other issues, but this gets too political and I dont want to go there.

 

[JSharp]

It is political. It's difficult to talk about the reason the oil producers want to move away from the dollar without talking about politics.

But the Federal Reserve gives us much of the information on it's website in plain numbers.

FRB: H.10 Release--Foreign Exchange Rates, Historical--November 19, 2007

Since January of 2000 the dollar has lost over 30% of it's value against the Euro. It's worth about 25% less vs. the Yen over the same period. And over a longer period, the last 25 years, our dollar has lost 50% of it's value against the Yen.

So if anyone wonders why their 1st world imported goods seem to cost so much lately, the answers are right there...

 

[deereman64]

Dont get me wrong I would enter into a political debate but decline in deference to the wishes of TBN

 

[JSharp]

Dont get me wrong I would enter into a political debate but decline in deference to the wishes of TBN

I understand. No offence taken and none meant.

 

[js5020]

Some good points/theories here. I trade currencies on the side and the dollar has been taking a real pounding in the spot markets, price at the moment Eur/Usd 1.4831 and rising, Us/Jpy 109.94 and falling, Us/Chf 1.1061 and falling. Basically the dollar is an outright sell and there dosen't seem to be any attempt to stop it's devaluation, and it could get worse!! China and other countries hold billions and if they decide to cut their losses Scotts or Charmin will be of more value than the dollar,,, however for them to do such a thing would possibly destroy their own economies so don't panic. And if things don't slow down I expect other countries will intervene to protect their interests. And if nothing else traders will eventually sense a bargan and start buying again.