The value of the US Dollar is not as a store of wealth, but as a reliable unit of trade. If that changes, or gets bypassed, it could be big trouble.
I bet the former owner of Yugos Oil is laughing his ass off now........................
Has china responded?
Correct me if my thoughts are astray, please.
Isn’t the real threat to the US that Saudi Arabia and Iraq will start selling oil in currencies other than the dollar? Isn’t that why we have been kowtowing to the Arab Muslims for some many decades?
I guess the main point is that instead of putting money into Western banks, buying US treasuries and buying US stocks in a big way, the big foreign oil producers will suddenly be withdrawing funds.
That is pretty straightforward - not some tinfoil hat conspiracy.
We could argue about how much, but we know that the price drop has been huge, and that many oil producers’ national budgets have gone from surplus to big deficits. Now they need to spend their profits rather than invest them.
These big investors will not be driving up stock prices this year, and may start some selling. They will not be buying mountains of US treasuries at near zero interest rates, so rates might have to rise a bit to sell all the debt US politicians want to spend. Banks won’t have quite as much money jamming their vaults, they will be more careful where they loan what is left, so some won’t get funded.
They are not the only, or even the largest players in these markets, but their swing from being big buyers to net sellers will effect the US stock market, US interest rates and availability of loans - to some marginal degree.
Other factors might make up the difference, but this is a significant impact to consider. Low oil prices are a net positive, but there will be some negative adjustments.
The Fed will nuke the Dollar when they meet in two weeks, by making the very necessary upward tweak in interest rates.
All hell will break loose after that. Bad for everyone but those that keep their wealth in precious metals.
If they don’t do it, metals will fall slightly first, but resume their climb as China begins demolishing the dollar from the outside.
Always watch the terms being used. Most of the time they are "good sounding" terms used to disguise something evil.
As an aside, one of the few advantages of getting old is that you don't have to read the "minutes of the previous meeting." You were there and remember it. It's harder to put something over on someone who can answer "yes" to "Vas you dere, Charlie?"
How is that new reserve currency coming along, Vladimir?
Keep in mind both economies are Capitalist even though Socially they are both communist.
I know they are saying this is going to be doom and gloom for Russia, but I can't see how?
If Russia was the old Soviet Union Communist economy or like Venezuela Socialist economy. Then I could see it hurting them.
However, Russia has a 13% flat tax only. Ever since they implemented it. They have a surplus of tax money.
Now who I think this will hurt is us. It will hurt our Shell Oil industry.
Although the cost of doing business world wide will be cheaper which is really good for everyone.