Sent in by a reader:
What do these seven countries have in common? In the context of banking, one that sticks out is that none of them is listed among the 56 member banks of the Bank for International Settlements (BIS). That evidently puts them outside the long regulatory arm of the central bankers’ central bank in Switzerland.
The most renegade of the lot could be Libya and Iraq, the two that have actually been attacked. Kenneth Schortgen Jr., writing on Examiner.com, noted that “[s]ix months before the US moved into Iraq to take down Saddam Hussein, the oil nation had made the move to accept Euros instead of dollars for oil, and this became a threat to the global dominance of the dollar as the reserve currency, and its dominion as the petrodollar.”
According to a Russian article titled “Bombing of Lybia – Punishment for Ghaddafi for His Attempt to Refuse US Dollar,” Gadaffi made a similarly bold move: he initiated a movement to refuse the dollar and the euro, and called on Arab and African nations to use a new currency instead, the gold dinar. Gadaffi suggested establishing a united African continent, with its 200 million people using this single currency. During the past year, the idea was approved by many Arab countries and most African countries. The only opponents were the Republic of South Africa and the head of the League of Arab States. The initiative was viewed negatively by the USA and the European Union, with French president Nicolas Sarkozy calling Libya a threat to the financial security of mankind; but Gaddafi was not swayed and continued his push for the creation of a united Africa.
Strangely, I\’ve actually been on a TV talk show with one of the gold dinar advocates and he, at least, was a loon. Tehre\’s a fairly good reason we gave up commodity based currencies: it makes the money supply dependent upon how fast people can produce the currency. Which really isn\’t what we want at all, as the Spanish inflation of the 16th century showed us and to a lesser extent as the opening up of the Witwatersrand did in the 1880s.
True, governments can be worse with fiat currencies, but that doesn\’t make gold (or any other such commodity) good money either.
But the bit that proves that this is looney tunes time is that bit about euros for oil. That the US $ is the world\’s reserve currency is true. But it\’s not actually all that important to the US that this is so. The profit they make out of it is \”seignorage\”, the differrence between the costs of barrels of ink and reams of paper and what they can sell the newly printed hundred $ bills for. This is usually estimated at some $20 billion a year.
Nice cash to have, sure, but in the context of a $14 trillion economy it\’s a rounding error.
Even if the world did start trading oil exclusively in euros, that $20 billion\’s the maximum they could lose as a result of the loss of \”petrodollar\” status. And no, the reserve status of the dollar is not linked in any but the most tenuous of ways to the fact that oil is traded in it anyway.
Any conspiracy theory you see with this in it can safely be dismissed as Woo.