OPEC NATIONS DISCUSS DROPPING THE DOLLAR IN PLACE OF THE EURO

Currency trading is not for the faint of heart.

First, trading oil in Euros or Dollars is meaningless. They are just numbers on a screen (fungible).

The US has been keeping the interest rate low which increases the supply of money (inflation) while Europe has been keeping the interest rate high which decreases the supply of money (deflation).

Factor in the fact that the Yuan is still pegged to the dollar (I think they simply buy dollars) for all practical purposes and the net result is a very confusing situation.

Raising interest rates in the US will contract the money supply and possibly put us in a depression. Lowering interest rates (like the Japanese did) could put us in a period of stagflation. How long can the Chinese keep buying dollars? When they stop buying dollars they will lose their competitive advantage.

I admit it, I don’t know how this is going to play out. It is a big game of chicken. Eastern Asia is working hard to keep their currencies devalued, Europe is working hard to keep its currency overvalued and the US seems to be putting downward pressure on its currency, or it could be a response to the Chinese buying US currency (subsidy).

This is all a big game of Asia and the US trying to get a competitive advantage. The only thing I am pretty sure of is that Europe will be the big loser. Timing is everything : )

Opec putting its money into the Euro is like Japan buying US property in the 80’s or people putting their money into stocks in 2002. I have a hard time trying to see a long term downside for the US. I suspect that OPEC is already invested in the Euro and they are now playing the currency game They are probably selling the Euro and buying dollars right now.

Uusually helps to read the story rather then trust the Junk Media to accurate write a headline. He did not say it, he responded to a question about it.

`Yes, there are some'' Gulf Cooperation Council states considering dropping their pegs to the dollar, which has fallen 13 percent against the euro in the last 12 months, al-Shimali said in an interview in Kuwait late yesterday without naming the countries.

It begins....

The dollar isn’t worth much compared to even a few years ago, this doesn’t surprise me. I remember 2 summers ago seeing that oil hit a record high of $64/barrel, and I remember thinking how ridiculously high that was. Ha.

When I was in Canada last summer the Canuck buck was wort 95 US cents. Now 1 Canuck buck = ~$1.10 USD (last I looked, anyway). The Omani riyal is worth about $2. The OMANI RIYAL is stronger than the US dollar.

Iran’s threat to switch to Euros may have just been an “in your face” vent against our ships in the Gulf firing on their little speedboats, but the Gulf states don’t share the same resentment for us that Iran does, indicating this might a dollar value-related decision.

The Saudis aren’t increasing their production either. Running out?

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