To: autumnraine
Ive heard for years if we stopped trading oil in dollars, the dollar will crash. Do you think this is true?
It's basic supply and demand. Sense the dollar has nothing supporting it, the only thing that supports keeps its value up is that there has been an inherent demand for it.
If you evaporate a large part of that demand, then a rapid devaluation ensues.
This devaluation hurts further confidence in the dollar and even further devalues it. Since the dollar is only paper, the only true bottom is the greater of the value of the paper or the value for which the government is willing to redeem it for in other units in order to stabilize the currency.
To: TheRiverNile
“If you evaporate a large part of that demand, then a rapid devaluation ensues.”
Oil is not a large part of the demand for dollars.
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