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137 comments on Oil Prices - A Little More of the Story

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z on October 26, 2008 - 12:53pm Permalink | Subthread | Parent | Comments top

This is the genius of the dollar hegemony tax system. It is voluntary and hidden. No one is forcing foreigners to hold dollars or treasuries.

They do it more or less voluntarily. They could buy gold or other currencies as soon as the dollars arrive, but they choose to hold dollars. This tells me that they think dollars are the best option compared to the alternatives.

Or, more likely, they have ulterior motives such as keeping they own currencies from appreciating. If that is the case they are getting what they deserve when they hold depreciating dollars. Keeping one's currency artificially low is just as evil as depreciating it with the computerized printing press.

The other reason they hold dollars is that the American twin trade and fiscal deficits are so huge that no other store of value is large enough to absorb a conversion without causing instability in that market. The ensuing instability might result in a net loss for any country attempting it.

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kdolliso on October 26, 2008 - 1:06pm Permalink | Subthread | Parent | Comments top

What you're saying, Z, is that in a "Global" economy you've gotta have a "Global" Currency. A "Clearinghouse," if you will. A traffic cop.

The Dollar is It. When "push" comes to, "shove," they all run home to "Mama," and, "Mama" is the U.S. Greenback.

We've, somehow, got to get the money from the manufacturing, oil-producing nations to the customer (laboring) nations. Somehow, we've got to organize a mass lending from the U.S., Euro, Chinese, Russian governments (taxpayers" to the Azerbaijani, Ukrainian, Hungarian banks.

Jeez. Well, nobody said it was all gonna be "Easy."

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weatherman on October 26, 2008 - 1:20pm Permalink | Subthread | Parent | Comments top

It was like when the US was running a big deficit with Japan in the 1980's. The wisdom was the US was getting the goods and the japs were getting bits of paper in return. The same thing is happening with China, and the Chinese have just realised.

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kdolliso on October 26, 2008 - 1:35pm Permalink | Subthread | Parent | Comments top

Well, that deal seems to have worked out okay for the Japanese doesn't it?

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css1971 on October 26, 2008 - 5:43pm Permalink | Subthread | Parent | Comments top

Indeed. What really happened was that the Japanese modernised their entire country, the US got a load of cheap crap and sold off the working lives of their children in exchange.

Bargain.

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137 comments on Oil Prices - A Little More of the Story

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