Forgive my ignorance on economic matters, but how does the currency oil is paid for in effect anyone in the long run?
If I buy a CD or a Download on say Bandcamp.com, the item will be priced in USD, GBP, Euros, yen, rubles, flobble beads or whatever currency the seller wants to be paid in. I pay for said item and the equivalent value in GBP is taken from my account, the exchange rate is calculated automatically. So why should oil sales be any different?
If it is can some one explain please?
When you exchange UKP for dollars you are buying dollars, which increases the value of the dollar. People argue this makes the value of the dollar artificially high and stable, and essentially exports inflation to other countries.
When you exchange UKP for dollars you are buying dollars, which increases the value of the dollar. People argue this makes the value of the dollar artificially high and stable, and essentially exports inflation to other countries.
It requires countries to buy dollars - thus increasing demand.
it is also instrumental in supporting the US$ as a "reserve currency" - which is to say a currency that countries will keep large amounts of on hand because it is universally acceptable as a means of paying debt and thus important as a foreign exchange reserve.
IIRC I was taught at uni somewhere long ago that there was a deal between the US and Saudi Arabia in the 50's or 60's for the US to provide unqualified support for the regime and het regime to only accept the US$ for payment for oil, and this still underpins both the political and financial world today.
Can't say how true that is tho - memory is not my long suite any more :/
Below is an update to an article on Forbes by Bill Conerly, regarding this exact topic:
A final note on a related and confusing issue. Several people in the discussions noted that oil is priced in dollars. That fact has no importance at all. Although world petroleum trades use dollars to show the price per barrel, you can buy oil in any currency. Simply call a trader and say that you have Euro, yen, pounds or pesos that you would like to spend on oil. Either the trader will take your currency at an appropriate exchange rate, or you can have your bank do an instant conversion to dollars and then immediately transfer the dollars to the oil seller. You need only own dollars for a second or two, if that.
What he is saying is basically that what currency oil is traded in has no importance to the Dollar-currency at all, due to the fact that it is still possible to buy and sell oil in any currency. Even if I would have to exchange my EUR to USD, the receiving company would hereafter exchange from USD to their local currency. Which means that the dollars would in our digital world only exist for a few seconds.
The article in whole is quite interesting, it talks about the foreign currency reserves countries hold, which consists of 60% USD. The article discusses the impact of this practice (Low interest rate since 30% of US debt is owned by foreign countries) and argues that there always will be a demand for USD as foreign currency reserve.
Large inflows of petrodollars into a country often has an impact on the value of its currency. For Canada it was shown that an increase of 10% in the price of oil increases the Canadian dollar value versus the US dollar by 3%[7] and vice versa.
This shows that the use of dollars in the exchange of oil has an impact on the local currency of the oil-producing country, not the other way around.
I have not spend hours researching the above, men but a did a few google-searches trying to find any source explaining what impact the use of USD as currency for oil has in the US economy and what would happen if this was changed. What I found was mainly articles describing the impact on the oil-producing country, and a lot of conspiracy sites of course. I do not think there is any evidence showing that anything serious would happen to the US economy if everybody started trading oil in EUR, GBP, YEN or DKK.
I'm just curious here, do most feel the WWIII is inevitable. Meaning will it eventually happen in 5yrs, 10yrs, 30yrs, or a 100yrs from now. History predicts it's inevitable. Whether its over money, land, or values it's bound to happen, so I see no harm in discussing it to certain extents. It keeps the public aware and on their toes
I'm just curious here, do most feel the WWIII is inevitable. Meaning will it eventually happen in 5yrs, 10yrs, 30yrs, or a 100yrs from now. History predicts it's inevitable. Whether its over money, land, or values it's bound to happen, so I see no harm in discussing it to certain extents. It keeps the public aware and on their toes
world war noun
noun: world war; plural noun: world wars
a war involving many large nations in all different parts of the world. The name is commonly given to the wars of 1914–18 and 1939–45, although only the second of these was truly global.
I can imagine a war involving many nations, but not a huge war taking place all over the world. So no, I do not think so. Mainly due to the NATO cooperation, which, in my oppinion, will prevent such a global war from happening. The closest would be if the relationship between Russia and the US/EU became worse, but still in such a scenario I think both sides would loose too much to even consider being the first one to pull the trigger.
world war noun
noun: world war; plural noun: world wars
a war involving many large nations in all different parts of the world. The name is commonly given to the wars of 1914–18 and 1939–45, although only the second of these was truly global.
I can imagine a war involving many nations, but not a huge war taking place all over the world. So no, I do not think so. Mainly due to the NATO cooperation, which, in my oppinion, will prevent such a global war from happening. The closest would be if the relationship between Russia and the US/EU became worse, but still in such a scenario I think both sides would loose too much to even consider being the first one to pull the trigger.
When I say World War, and I know the definition, I was thinking more along the lines of previous World Wars that involved a dozen or so nations and doesn't necessarily have to be global
When I say World War, and I know the definition, I was thinking more along the lines of previous World Wars that involved a dozen or so nations and doesn't necessarily have to be global
But with that definition, a conflict involving NATO members would be a world war, since a lot of countries contribute. I think the war has to take place in many different parts of the world. My apologies if I misunderstand you.
Some people think the 7 Yeats War of 1756-63 was the first "world war" due to the global nature of the conflict - the British and French fought over their colonial empires all over the world - including North America (where many of the USA's first commanders gained military experience), India and Africa, and the Spanish and Portuguese fought in South America.
wrong word choice, but history does have a tendency of repeating itself, therefore giving you an idea of what could "potentially" happen. Examining the history of a civilization could hypothetically give you an idea of how they will react to certain situations, like when dealing with Israel, Palestine, and countries in Africa.
