Though Mortal Enemies, Iraq and Iran Similarly Threatened the U.S. Petrodollar
In late 2000, about the time the Commodities Futures Modernization Act of 2000(see Time For Europe and America to Implement the One-Penny Solution, January 7th, 2012, this site) snuck through Congress virtually in the dead of night, and signed by President Clinton on his last day in office. France and a few other EU members convinced Saddam Hussein to change the petrodollar process and sell Iraq's oil-for-food in euros, not dollars. At about the same time, other nations hinted at their interest in non-US dollar oil trading, including Russia, Iran, Venezuela, and Indonesia.
Oil-consuming nations would have had to divest themselves of U.S. dollars ,via their central bank reserves, and replace them with either euros or whatever currency the party nations preferred. The consequences would be the dollar would crash in value, U.S. currency would collapse, and massive inflation would ensue. Foreign funds would flee from U.S. stock markets and dollar denominated assets, there would be a run on the banks much like the 1930s, and the current-account deficit would become unserviceable. The inevitable result would lead the U.S. budget deficit to go into default creating a severe worldwide depression brought on by the U.S. inability to pay it's debts.
The fiat dollar’s primacy in international oil trade created a foreign demand for “petro-dollars”. That demand created an artificial, extrinsic value for fiat dollars that are intrinsically worthless.
Saddam Hussein threatened the dollar’s primacy as the world’s only “petro-dollar” in A.D. 2000 by selling Iraqi crude for euros. We invaded Iraq in A.D. 2003, wrecked the country and hanged Hussein, but it was too late to stop the world’s slow slide away from reliance on “petro-dollars”. As a result, the dollar’s value as measured on the US Dollar Index has fallen about 36% since A.D. 2000.
“Iran and Russia replaced the U.S. dollar with their national currencies in bilateral trade . . . . The proposal to switch to the ruble and the rial was raised by Russian President Dmitry Medvedev at a meeting with his Iranian counterpart, Mahmoud Ahmadinejad . . . . Iran has replaced the dollar in its oil trade with India, China and Japan.”
his announcement constitutes a body blow to the dollar. Insofar as China, Japan, India and Russia (the 2nd, 3rd, 9th and 11th largest economies in the world) are beginning to trade in their own currencies and without the intervening “aid” of US dollars, the dollar is clearly being stripped of its status as World Reserve Currency and “petro-dollar”. Without that status, the extrinsic support for the dollar’s value must fade and the dollar will be increasingly subject to inflation and devaluation.
President Barack Obama issued his most direct threat yet of U.S. military action against Iran if it builds a nuclear weapon, but in a message to Israel's leader ahead of White House talks he also cautioned against a pre-emptive Israeli strike.
Iran is accepting renminbi for some of the crude oil it supplies to China, industry executives in Beijing and Kuwait and Dubai-based bankers said, partly as a consequence of U.S. sanctions aimed at limiting Tehran’s nuclear program.
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The trade is worth as much as $20 billion-$30 billion annually according to industry estimates, but a share of it is in barter form. Zhuhai Zhenrong, for example, pays Iran for its oil by providing services such as drilling, these people add.
“The global financial crisis accelerated the shift from the west to the east,” said the chief executive of one bank in Dubai. “Such measures [as the U.S. sanctions against Iran] will now enhance the acceptability of the renminbi as a transaction currency.”
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India, which already settles its oil purchases from Iran in rupees, was again urged on Monday by Hillary Clinton, U.S. secretary of state, to cut its imports further.
President Barack Obama said Sunday the United States won't hesitate to use force to halt Iran from acquiring a nuclear weapon, something he says could trigger an arms race in one of the world’s most volatile regions.
"I will not hesitate to use force when it's necessary to defend the United States and its interests," says Obama, speaking to thousands of delegates to the policy conference of the American-Israel Public Affairs Committee (AIPAC) in Washington.
US Secretary of State Hilary Clinton said China and Singapore, which also received the temporary exception, had earned the reprieve by cutting imports.
All 20 of Iran's major oil buyers have now been exempted from the sanctions before they come into effect on Friday.
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Under a US law that came into effect in 31 December, countries had until 28 June to show they had significantly reduced the amount of crude oil they purchase from Iran or face being cut off from the US financial system.
Mrs Clinton said that the significant reductions by all 20 countries showed that the sanctions had made an impact.
The Majlis National Security and Foreign Policy Committee has put forward a proposal to block the strategic Strait of Hormuz to prevent the passage of tankers that carry oil for the countries that have imposed sanctions on Iran, an Iranian MP announced on Sunday.
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The measure would be a response to the European Union’s oil embargo on Iran that took effect on July 1 and a new U.S. law that penalizes countries that do business with the Central Bank of Iran by denying their banks access to the United States market. The law came into force on June 28.
The Strait of Hormuz is one of the world's most strategic shipping channels. It connects the vast majority of the world's countries with the crude oil that fuels their economies.
Iranian forces launched long-range missiles as part of an extensive military drill on Tuesday, the Iranian state-run station Press TV reported, on the second day of the Iranian Revolutionary Guards’ Great Prophet 7 exercise.
According to the Press TV report, IRGC forces launched Shahab 1, 2, and 3 missiles, as well as the shorter ranged Khalij Fars, Tonda, Fateh , Zelzal and Qiam, targeting “simulations of the trans-regional forces’ airbases” in the northern region of Semnan Desert.
The United States has quietly moved significant military reinforcements into the Persian Gulf to deter the Iranian military from any possible attempt to shut the Strait of Hormuz and to increase the number of fighter jets capable of striking deep into Iran if the standoff over its nuclear program escalates.
The deployments are part of a long-planned effort to bolster the American military presence in the gulf region, in part to reassure Israel that in dealing with Iran, as one senior administration official put it last week, “When the president says there are other options on the table beyond negotiations, he means it.”
But at a moment that the United States and its allies are beginning to enforce a much broader embargo on Iran’s oil exports, meant to force the country to take seriously the negotiations over sharply limiting its nuclear program, the buildup carries significant risks, including that Iran’s powerful Islamic Revolutionary Guards Corps could decide to lash out against the increased presence.
isn't this fun?
please, dont buy into the whole nuclear weapons idea that the federal govt is spewing again. they did it with Iraq in 2002 and are doing it again with Iran.
they are using the same freaking excuse- WMD's for Iraq and nuclear weapons for Iran.
When Iran makes nuke weapons I'm gonna laugh at you _______________________________________________________________
"If guns kill people then spoons make us fat!"
Originally posted by: ~~Snake~~ When Iran makes nuke weapons I'm gonna laugh at you
Yeah. It will be funny. They'll only be 70 years behind us in technology.
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See through the propaganda. Stop empowering and enriching the state by cheering its wars. Set aside the television talking points. Look at the world anew, without the prejudices of the past, and without favoring your own government’s version of things. Be decent. Be human. Do not be deceived by the Joe Bidens, the John McCains, the Barack Obamas and Hillary Clintons. Reject the biggest government program of them all. Peace builds. War destroys.
-Lew Rockwell
Originally posted by: ~~Snake~~ When Iran makes nuke weapons I'm gonna laugh at you
Yeah. It will be funny. They'll only be 70 years behind us in technology.
huh? A 70 year old nuke can kill millions! _______________________________________________________________
"If guns kill people then spoons make us fat!"
please, dont buy into the whole nuclear weapons idea that the federal govt is spewing again.
We should believe some random guy online that thinks posters for the missing after 9/11 went up to fast?
When you carry the water for the enemy, you are the fucking enemy. Every fucking post you create is about how badly America needs to be brought down. The sole reason being that you are a distrusting person.
As much as this country needs to be fixed, I don't think we should wallow in our own pity while other country's seek to destroy us. I don't expect you to have some backbone and do what's best for this country. You will always hate it.
Iranians Planned to Attack US, Israeli Targets in Kenya: Officials
Two Iranian men who led officials to a 33 pound stash of explosives have now allegedly admitted they were plotting to attack, U.S., Israel, Saudi or British targets in Kenya, according to the Associated Press.
Ahmad Abolfathi Mohammad and Sayed Mansour Mousavi, who appeared in a Nairobi court last week, were arrested on June 19 in Nairobi and then led Kenyan authorities to 15 kilograms of explosives in Mombasa. They are believed to be members of the Revolutionary Guards' Quds Force, say Kenyan officials.
Let me guess, American interventionism created this plot because Iran is trying to avoid using the dollar because they don't have enriched Uranium.
Did you know that America controls the money transfer system, Swift? The reason Iran wants to use another currency or gold is because they can't transfer money in or out of the country. It will have to be physically carried.
I digress from your reality, Iran should be left to it's peaceful pursuits without our interventionism.
Iranians Planned to Attack US, Israeli Targets in Kenya: Officials
Two Iranian men who led officials to a 33 pound stash of explosives have now allegedly admitted they were plotting to attack, U.S., Israel, Saudi or British targets in Kenya, according to the Associated Press.
Ahmad Abolfathi Mohammad and Sayed Mansour Mousavi, who appeared in a Nairobi court last week, were arrested on June 19 in Nairobi and then led Kenyan authorities to 15 kilograms of explosives in Mombasa. They are believed to be members of the Revolutionary Guards' Quds Force, say Kenyan officials.
Let me guess, American interventionism created this plot because Iran is trying to avoid using the dollar because they don't have enriched Uranium.
Did you know that America controls the money transfer system, Swift? The reason Iran wants to use another currency or gold is because they can't transfer money in or out of the country. It will have to be physically carried.
I digress from your reality, Iran should be left to it's peaceful pursuits without our interventionism.
That is why RP foreign policy and views are retarded on a grand scale. I believe we shouldnt be engaging in everything, but certain areas like Iran directly affect us. Post edited by ~~Snake~~ at 7/3/2012 5:31:06 PM
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"If guns kill people then spoons make us fat!"
Originally posted by: Cocytus I don't expect you to have some backbone and do what's best for this country.
and what exactly, is that?
go to war with Iran because Israel is threatened by them? no thanks. israel can DIAF for all i care.
Originally posted by: Cocytus Did you know that America controls the money transfer system, Swift? The reason Iran wants to use another currency or gold is because they can't transfer money in or out of the country. It will have to be physically carried.
I digress from your reality, Iran should be left to it's peaceful pursuits without our interventionism.
To explain this situation properly, we have to start in 1973. That's when President Nixon asked King Faisal of Saudi Arabia to accept only US dollars as payment for oil and to invest any excess profits in US Treasury bonds, notes, and bills. In exchange, Nixon pledged to protect Saudi Arabian oil fields from the Soviet Union and other interested nations, such as Iran and Iraq. It was the start of something great for the US, even if the outcome was as artificial as the US real-estate bubble and yet constitutes the foundation for the valuation of the US dollar.
By 1975 all of the members of OPEC agreed to sell their oil only in US dollars. Every oil-importing nation in the world started saving their surplus in US dollars so as to be able to buy oil; with such high demand for dollars the currency strengthened. On top of that, many oil-exporting nations like Saudi Arabia spent their US dollar surpluses on Treasury securities, providing a new, deep pool of lenders to support US government spending.
The "petrodollar" system was a brilliant political and economic move. It forced the world's oil money to flow through the US Federal Reserve, creating ever-growing international demand for both US dollars and US debt, while essentially letting the US pretty much own the world's oil for free, since oil's value is denominated in a currency that America controls and prints. The petrodollar system spread beyond oil: the majority of international trade is done in US dollars. That means that from Russia to China, Brazil to South Korea, every country aims to maximize the US-dollar surplus garnered from its export trade to buy oil.
The US has reaped many rewards. As oil usage increased in the 1980s, demand for the US dollar rose with it, lifting the US economy to new heights. But even without economic success at home the US dollar would have soared, because the petrodollar system created consistent international demand for US dollars, which in turn gained in value. A strong US dollar allowed Americans to buy imported goods at a massive discount - the petrodollar system essentially creating a subsidy for US consumers at the expense of the rest of the world. Here, finally, the US hit on a downside: The availability of cheap imports hit the US manufacturing industry hard, and the disappearance of manufacturing jobs remains one of the biggest challenges in resurrecting the US economy today.
There is another downside, a potential threat now lurking in the shadows. The value of the US dollar is determined in large part by the fact that oil is sold in US dollars. If that trade shifts to a different currency, countries around the world won't need all their US money. The resulting sell-off of US dollars would weaken the currency dramatically.
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The Iraq war provides a good example. Until November 2000, no OPEC country had dared to violate the US dollar-pricing rule, and while the US dollar remained the strongest currency in the world there was also little reason to challenge the system. But in late 2000, France and a few other EU members convinced Saddam Hussein to defy the petrodollar process and sell Iraq's oil for food in euros, not dollars. In the time between then and the March 2003 American invasion of Iraq, several other nations hinted at their interest in non-US dollar oil trading, including Russia, Iran, Indonesia, and even Venezuela. In April 2002, Iranian OPEC representative Javad Yarjani was invited to Spain by the EU to deliver a detailed analysis of how OPEC might at some point sell its oil to the EU for euros, not dollars.
This movement, founded in Iraq, was starting to threaten the dominance of the US dollar as the global reserve currency and petro currency. In March 2003, the US invaded Iraq, ending the oil-for-food program and its euro payment program.
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Tehran Pushes to Ditch the US Dollar
The official line from the United States and the European Union is that Tehran must be punished for continuing its efforts to develop a nuclear weapon. The punishment: sanctions on Iran's oil exports, which are meant to isolate Iran and depress the value of its currency to such a point that the country crumbles.
But that line doesn't make sense, and the sanctions will not achieve their goals. Iran is far from isolated and its friends - like India - will stand by the oil-producing nation until the US either backs down or acknowledges the real matter at hand. That matter is the American dollar and its role as the global reserve currency.
The short version of the story is that a 1970s deal cemented the US dollar as the only currency to buy and sell crude oil, and from that monopoly on the all-important oil trade the US dollar slowly but surely became the reserve currency for global trades in most commodities and goods. Massive demand for US dollars ensued, pushing the dollar's value up, up, and away. In addition, countries stored their excess US dollars savings in US Treasuries, giving the US government a vast pool of credit from which to draw.
We know where that situation led - to a US government suffocating in debt while its citizens face stubbornly high unemployment (due in part to the high value of the dollar); a failed real estate market; record personal-debt burdens; a bloated banking system; and a teetering economy. That is not the picture of a world superpower worthy of the privileges gained from having its currency back global trade. Other countries are starting to see that and are slowly but surely moving away from US dollars in their transactions, starting with oil.
If the US dollar loses its position as the global reserve currency, the consequences for America are dire. A major portion of the dollar's valuation stems from its lock on the oil industry - if that monopoly fades, so too will the value of the dollar. Such a major transition in global fiat currency relationships will bode well for some currencies and not so well for others, and the outcomes will be challenging to predict. But there is one outcome that we foresee with certainty: Gold will rise. Uncertainty around paper money always bodes well for gold, and these are uncertain days indeed.
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[read the entire article to know wtf is really going on. or, if you want, you can continue to spew the govts official line of BS]
As tensions between the US and Iran heat up, author Michael T. Winter believes the main reason behind America’s harsh stance is Tehran’s move to seek an alternative to the dollar as an oil currency.
Economic sanctions, spearheaded by the US and, less willingly, the EU could have a disastrous effect on both of their respective economies. If Iran cannot sell their oil to Europe, there are plenty of customers waiting in the wings, and if they come bearing not petrodollars, but gold and sovereign currencies, then all the better for Iran. These sanctions, if enforced, will in effect place a serious dent in the power of the petrodollar.
Any rhetoric regarding Iran’s nuclear program and the insistence on crippling it is nothing more than a US attempt to force regime change for one more receptive to maintaining the hegemony of the petrodollar.
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this has nothing to do with nuclear weapons at all, nothing to do with swift and everything to do with controlling the worlds oil sales/purchases through forcing other nations to only use our currency.
i would have much more respect for the neo-cons if they were honest about why they want war with Iran, if they would admit that it was all about protecting Israel, and the US currency- to advert a massive sell-off of US currency and protecting the entire world economy from collapse if these oil selling nations begin to accept a different, foreign currency for oil sales instead of using the tired "ZOMG!!! nuclear weapons!!" line they are using.
weather we like it or not, the US Dollar is the worlds reserve currency.
Originally posted by: Cocytus As I've said before, it's one thing to talk about Iran when you don't have intel, but once you get the intel things change.
Should our President trust the intel? That's another can of worms.
I'm confident that Obama knows more about the world we live in than some dip shit on a gaming forum.
I'm also confident that Obama makes far more money from that "world", serving that "world", than any dip shit on a gaming forum.
That's the neatest thing about propaganda and being a paid propaganda minister.
That's also the neatest thing about a proven paid shill.......once you have proven yourself to be in bed with special interests and secret agendas it's hard to ever figure out how/when to extract them from that process again. Post edited by Mockery at 7/4/2012 4:10:44 PM
The harder we continue to chase after and try to fix problems abroad, even self manufactured and completely fake ones, the less we will ever have to realize our massive shortcomings back at home.
Be them economic, fiscal, etc......
Keep on hunting down and chasing after these illusive boogeymen as our country continues to rot from the inside and burn to the ground. Post edited by Mockery at 7/4/2012 4:14:32 PM
Originally posted by: Cocytus As I've said before, it's one thing to talk about Iran when you don't have intel, but once you get the intel things change.
Should our President trust the intel? That's another can of worms.
I'm confident that Obama knows more about the world we live in than some dip shit on a gaming forum.
I'm also confident that Obama makes far more money from that "world", serving that "world", than any dip shit on a gaming forum.
That's the neatest thing about propaganda and being a paid propaganda minister.
That's also the neatest thing about a proven paid shill.......once you have proven yourself to be in bed with special interests and secret agendas it's hard to ever figure out how/when to extract them from that process again.
I miss Bob.
I guess if you believe the whole MIC conspiracy, then a paid shill would never find that another country wanted to destroy anybody.
Funny how that works. Do you honestly believe we live in a world that doesn't contain characters that want to destroy whatever they can? It seems like the only argument you can make is that America is the destroyer. If we would only stop, the rest of the world would love us.
Man, it's fucking 4th of July, stop being a pussy and go through m-80's at the kids.
but in a message to Israel's leader ahead of White House talks he also cautioned against a pre-emptive Israeli strike.
