US bombed Iraq cos they started trading in Euros?

[Weeks]

Well, one of the reasons anyway.

The 2000 Changeover.


The Theory:
"...have pointed out that the world has been slowly shifting into an alternative currency to use for international transactions: the euro. Not long ago, the Iraqi government made it official policy that Iraqi oil, two-thirds of which is purchased by American oil companies, had to be paid for in euros. ...

China and Russia have hinted that they may begin to hold more of their foreign currency reserve assets in euros in place of dollars.

If the euro were to increasingly become the alternative international currency of choice in competition with the dollar, the global demand for greenbacks would fall, the value of the dollar would decline, and the U.S. government would find it far more difficult both to export inflation and to finance its budget deficits. The financial clout and muscle of the American government would be dramatically undermined over time with the dollar increasingly no longer the only global reserve currency in town.

With the American military serving as the keeper of the oil fields in an occupied Iraq, the first policy change undoubtedly would be that all Iraqi oil sales will be once again exclusively in dollars. This would give the U.S. government the chance to try to stem the tide toward international use of the euro in place of the dollar and to put pressure on the Saudi government to maintain its long-established policy of dealing only in dollars on the oil market. And at the same time Iranian enthusiasm for euro dealings might be tempered if the American liberators are just next door."



Further reading:
Pre-war Observer article about using euros to trade for oil also.

[Phang]

world once roamed by dinosaurs? ((DM lol))

[Cynical Oracle]

This is not exaclty a new conspiracy theory..

[Weeks]

Well i'd not heard of it before.

[IncubusGod]

Interesting

[wu_trax]

well, from one point of view it makes sence (if oil is traded in $ the us gets the oil for free, the saudis cant do much but buy us-bonds with it), but i still think the main aspect was to take controll of those oil fields and make sure to get a permanent and strong military presence in the whole area. why care about currency if you could just bomb the shit out of them in no time?

[Zar]

i think a thread like this has been created by both me and wu before :/

[Qdeathstar]

well, id have to say thats prolly inaccuratne on account that china and the other european nations have activly worked to keep the US dollar at a high price.. (alhthough they continue to fail)

[Qdeathstar]

and, if the oil is bought in USD the Unitied States doesnt get if for free.. that is idiotic.. :-/ ... Dont you pay euros for stuff you buy in europe, of course you do. All it means, if Oil was bought IN USD europe could get it for less euros that dollars... say it costs 15 dollars for something USD it would only cost liek 10 Euro . (im not using the exact ratio or nething...)

[wu_trax]

Originally Posted by Qdeathstar

and, if the oil is bought in USD the Unitied States doesnt get if for free.. that is idiotic.. :-/ ... Dont you pay euros for stuff you buy in europe, of course you do. All it means, if Oil was bought IN USD europe could get it for less euros that dollars... say it costs 15 dollars for something USD it would only cost liek 10 Euro . (im not using the exact ratio or nething...)

ok, the us buys oil from saudi arabia. the saudis get dollar for that. what do they do with these dollars? they buy us bonds. will that money ever be paid back? no, because unless there is some massive inflation in the us no us-goverment in the next 40 years will be able to pay back anything at all.
the situation is even worse for japan and china. japan alone paid half of the us budget deficit last year, for nothing. practically they gave their products away for free. and by doing that they become even more depended on the us as they already are.

[Ste]

If trading is done in dollars the US can control interest rates.
Apparently that is one of the reasons behind Argentinas crisis:
http://www.twnside.org.sg/title/twe276f.htm

Argentina’s problems began when the US Federal Reserve hiked up interest rates in February 1994 and over the next year doubled the short-term rates from 3 to 6 percent. Argentina was hit immediately because of the uncertainty created over emerging markets: Argentina’s borrowing rate increased by the US Fed’s 3 percentage point increases, and the increasing spread.

The reason the peso was linked to the dollar in the first place was because of intense lobbying by the US and the IMF (controlled by the US).

If countries stop trading in dollars then the US will start losing some of its influence.

[wu_trax]

but what else could they trade in? to trade in euros wont work, because other countries can get enough of them, we dont have such a large trade deficit. if you want to trade in euros you need some of these euros first.

[Weeks]

I thought you were joking.

[Tactitus]

Originally Posted by wu_trax

ok, the us buys oil from saudi arabia. the saudis get dollar for that. what do they do with these dollars?

They buy the stuff they need. You know, like food, oil drilling, storage and pipeline equipment, communications and construction equipment, medical equipment, computers, airplanes, military hardware, etc. They also spend a lot of money in the US--buying hotels, businesses, equities in general, education (something like 200K Saudis have received degrees in US Universities in the past 50 years), etc.

they buy us bonds.

US bonds aren't normally that good of an investment for those choosing to keep their money in dollars. I don't believe the Saudis are as financially naive as you seem to think they are.

[wu_trax]

yes, certainly you have a ballanced trade with saudi arabia, just like you have with the rest of the world.
look, they trade in dollars, therefore they are forced to invest in the us, either them directly or someone they do buisness. (what else could they do with those dollars?)

[JonnyBGood]

Originally Posted by wu_trax

yes, certainly you have a ballanced trade with saudi arabia, just like you have with the rest of the world.
look, they trade in dollars, therefore they are forced to invest in the us, either them directly or someone they do buisness. (what else could they do with those dollars?)

Exchange them? As a ridiculously rich country with a 50 year guaranteed income of billions I'd bet you'd get a decent exchange rate as well!

[wu_trax]

Originally Posted by JonnyBGood

Exchange them? As a ridiculously rich country with a 50 year guaranteed income of billions I'd bet you'd get a decent exchange rate as well!

and then what? then someone else has dollar which need to be invested in the us. every single cent of the us-trade deficit has to be invested in the us. (either that or you put them in some central bank reserve, which makes them even more useless than investing them)

[JonnyBGood]

Originally Posted by wu_trax

and then what? then someone else has dollar which need to be invested in the us. every single cent of the us-trade deficit has to be invested in the us.

Doesn't this hold true for every country with a trade deficit then? I'm not quite following the point here.

[wu_trax]

Originally Posted by JonnyBGood

Doesn't this hold true for every country with a trade deficit then? I'm not quite following the point here.

yes, but no other country is as important as the us. plus usually there is more inflation pressure to reduce the trade deficit once there is nothing left to cover it. but in case of the us with most raw materials and stuff traded in dollar, that doesnt happen, at least not at the extend necessary.

[JonnyBGood]

Originally Posted by wu_trax

yes, but no other country is as important as the us. plus usually there is more inflation pressure to reduce the trade deficit once there is nothing left to cover it. but in case of the us with most raw materials and stuff traded in dollar, that doesnt happen, at least not at the extend necessary.

Right. So your objection is that the most powerful economy in the world is the most powerful economy in the world and that they think this is pretty cool? Well oh noes I wasn't expecting that!

[wu_trax]

Originally Posted by JonnyBGood

Right. So your objection is that the most powerful economy in the world is the most powerful economy in the world and that they think this is pretty cool? Well oh noes I wasn't expecting that!

no, my objection is that the flood the whole world with their dollars which will cause global chaos.