Posted on 03/02/2006 12:14:39 AM PST by chuckles
April 1st, Iran will open oil trading in Euro's. What effect, if any, will this have on our currency? Some are predicting massive inflation, others, nothing at all. Most seem to think oil will climb for us, but not for Europe because the dollar will fall and gold will rise.
We buy no oil from Iran, only the Euros do. Therefore, it will if anything be deflationary, because pressure to inflate the DOLLAR value after the contract is signed, but before payment is rendered will now not affect the US Dollar.
If the Euros want to inflate their own currency its up to them.
Here you go Chuckles:
http://www.freerepublic.com/focus/f-news/1585297/posts
It will be funny to see if that comes true and Michael Moore emerges from his cellar to say the Bush administration attacked Iran at the behest of Halliburton because they didn't want the Euro to gain ground or somesuch foolishness. He will mention an obscure connection between Dick Cheney's paperboy and a neighbor of a janitor at Brown-Root as evidence that "eats--uh, speaks for itself."
Less demand for dollars globally means higher prices for the goods we import. That = inflation.
At the same time, if the dollars those foreign nations are sitting on are destined to inflate, there will be a strong motivation on their part to "buy a piece of the rock" here in the US. So, increased foreign ownership of real property can also be expected.
This means that the price of commercial properlty should also inflate.
It's not looking good for Bill Gates! :(
Read the linked article, it looks like it will be devastating to our economy.
http://newropeans-magazine.org/index.php?option=com_content&task=view&id=3463&Itemid=85
Its mission is to protect strategic American interests such as the dollar reserve currency and the US government's ability to print them without limit.
Iran is very aware at what happened to Saddam when he tried to sell oil in Euros.
Iran has been provoking us in a variety of ways, for a long time. They are asking for it.
And I vote that we give it to them.
BUMP
That is economic nonsense. Demand for a dollar does not translate into cheaper prices.
Just because you open a commodity exchange doesn't mean anyone will play there.
Many buyers will be wary of having, all of the sudden, to take into account the forex factors when dealing in oil. Do you take a thirty day contract in euros or in dollars? Adds a whole nother dimension to oil trading that many don't want to enter.
The crash scenario involves a whole buncha unlikely events, including that countries holding massive dollar reserves would dump them all of the sudden and switch to Euros.
Won't happen since the fall of the dollar (due to the dumping) would quickly wipe out the value of any dollars remaining in the reserve account.
Other countries, like China, have their currency pegged to the dollar and have no desire to commit suicide.
I make my living trading stocks and would hate to end up under a bridge because the worst thing imaginable happened and it may have been prevented.
If we have time to drone on about an accidental shooting and a port takeover that affects no one, then I think this should get at least a mention in ink.
As a personal opinion, I think there are enough Bush/America haters in the world that would gladly buy with euro's and shun the dollar just to see us fall. IN a capital market if you prefer one thing over another the preferred will rise in price and the shunned will fall. That means the dollar will slide to unheard of levels with no support for a bottom. Who would support the dollar and how? The only cure for the slide would be the Fed raising interest rates to the 25% levels like in Argentina or other Latin American countries. I remember looking at 30% interest rates on South American paper years ago and thinking,"Maybe I could go in and out quick enough before they had a revolution and make more there than here in a year". Not believing it can happen in America almost assures that it will. Remember Carter?
If Russia, Iran, Libya, and Valenzuela gang up on us, it's more than just Iran trying to cause trouble, it's a world conspiracy.
Nah, I live in the Western part of the state. You mainly get the weird accent in the Eastern parts of the state.
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