DislikedMate, sure, if you are Oil producer and selling to US, you could get paid in US dollars, or wheat, or corn, or whatever. But the point is, that if we buy Oil in Europe, we have to buy USD first and then we can buy Oil. If this silly rule is broken, and I believe it will be broken, it will not lead to protectionism. Why should it? It is like if you were selling cars, but you had to accept only one type of currency. I am making those cars, so I can accept whatever currency I want, or cant I? No, I cant, coz I would get bombed....Ignored
My response was me trying to kill 2 birds with one stone. I was addressing Currencyman's post also.
But the point is, that if we buy Oil in Europe, we have to buy USD first and then we can buy Oil.
This is because OPEC wanted to be paid in gold for oil and at the time US currency was on gold standard. They now take US dollars and convert it to gold as they do not believe in promissory notes. I agree that in the future OPEC may also decide to accept Euro, they may also decide to accept Arab gold Dinar or silver Dirham.It's their oil they can take what they want. They should have been investing in military and social infrastructure all these years instead of camels and gold stockpiles. See previous story I wrote
it will not lead to protectionism
Can you guarantee that? If EZ doesn't want to buy oil in US dollar, then either quit using oil, or develop an alternative energy source priced in Euro. If decision to not accept US dollar happens the currency would go into freefall, US can issue new currency for domestic trade, and outlaw old currency. Government outlawed private ownership of gold in 1933 in US by presidential order, so I don't see this as an impossibility in dire circumstance.
If this happens, no one will trade with US and that is how protectionism could begin.
It is like if you were selling cars, but you had to accept only one type of currency. I am making those cars, so I can accept whatever currency I want, or cant I?
Does BMW, Audi and other manufacturers take US dollar, or do they want payment in Euro? They get to decide, it's their product
What I am saying is, it would be fair for the rest of the world, if Oil was traded against basket of currencies (including gold, which is more of a currency than commodity).
It's not about fairness, it's about power, wealth, and control of resources. BTW- you may say gold is a currency, but until the US government says it is a currency, I still have to buy my toilet paper with Ben Bernanke's toilet paper
I am not in argument with you over this. I am in agreement with much of your reasoning, but the reality is reality is not always reasonable. I think alot of this is difference in European thought process and US thought process, which stems from what is perceived to be best for self.
I enjoy your comments, and hope you enjoy my form of cynicism and sarcasm.