Reply #15: Oh yeah, I forgot about that Iran Oil Bourse. [View All]

[robertpaulsen]

The Inevitable Collapse of the Greenback
Mike Whitney

May 2, 2006

"The ultimate financial impact of trading oil in Euros rather than dollars is a complex one, but according to many experts, such a move could lead to a collapse in value for the American currency, potentially putting the U.S. economy in its greatest crisis since the depression era of the 1930s." "Petro-euro: a reality or distant nightmare for the US?" AlJazeera.com

Today, Iran fired the first shot in a battle that will ultimately change the global economic system. Mehr News Agency announced that the long-anticipated Iran Oil Bourse (OIB) will open sometime next week on Kish Island competing head-on with the US dollar. Currently, all oil transactions are denominated exclusively in greenbacks (via the London and New York oil exchanges) giving the US a virtual monopoly on the oil trade and maintaining the dollar’s position as the world’s reserve currency. This privilege has allowed the US to generate massive deficits as well as a national debt of $8.4 trillion without fear of economic collapse but, the "time’s they are a-changin’". If Iran proceeds with its plan, the central banks around the world will convert some of their reserves into euros sending billions of dollars back to the America. This will result in either recession or depression.

The notion that the bourse poses a serious threat to the US economy has been widely dismissed as a left-wing, internet-conspiracy theory. In fact, there is nothing conspiratorial about it, unless the fundamental law of "supply and demand" no longer applies.

If fewer people want the greenback it becomes worth less. Is that conspiratorial?

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