Tuesday, October 6, 2009

The demise of the dollar

The demise of the dollar


In the most profound financial change in recent Middle East history, Gulf Arabs are planning – along with China, Russia, Japan and France – to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar.

Secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean that oil will no longer be priced in dollars.

The plans, confirmed to The Independent by both Gulf Arab and Chinese banking sources in Hong Kong, may help to explain the sudden rise in gold prices, but it also augurs an extraordinary transition from dollar markets within nine years.
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6 comments:

  1. i hope this isnt as important as i think it is

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  2. they will have to [EASE ] it in. just as china is easing out of u.s. treasuries. lol

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  3. There are a number of issues that all come together as countries move away from the dollar that may prove beneficial to our country in the long run. With our national currency being the world reserve currency our country has benefitted from lower transaction costs with some estimate that this adds .01% to our GDP but this situation presents problems as we often have to make choices between what is good for our nation and what is good for our trading partners. Currently, our choices are what is good for the USA and the others are feeling the pain from these decisions.We have not always chose this course. It is wrong to assume that a weak dollar means there are no benefits accruing to the USA since most choices affect some positively and some negatively. One needs to ignore the noise about the weak dollar and ask oneself "who benefits and who loses?"
    The USA essentially controls the IMF and World Bank if nothing other than by veto rights so any sudden changes should not be expected.
    I do think in the long run a move from the dollar as the reserve currency will be more beneficial to the world and force some economic control on the USA's economic policies. What we are seeing is an effort by some countries to not be subjected to the negative impacts of holding dollars as the USA seeks to right its ship.

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  4. my thinking is pretty self-centered here; since i dont have exports that ill be able to sell cheaper...when the green-inked paper im holding is no longer accepted as legal tender worldwide, im gonna end up using more of it everytime i fill my gastank...

    on a national basis; it means were gonna actually have to start producing something the rest of world wants in trade for oil and other imports; we fooled the world once into taking our worthless paper in exchange for real goods, but they wont be fooled again

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  5. Part of the equation here is that the value of the dollar is pegged to oil. One thing that will help is to eliminate our dependence on oil as the basis for our economy and for fuel. We need to move toward renewable and sustainable resources to accomplish this, and the sooner the better.

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  6. UPDATE: China, Russia Working On Yuan-Ruble Trade Settlement (WSJ)-China and Russia are working on ways to eventually settle their trade with the Chinese yuan and Russian ruble, senior government officials from the two countries said Tuesday. China Vice Premier Zhang Dejiang said both sides should expand local currency settlement in their border areas, and that China and Russia plan to set up a bilateral currency deal. As part of such moves, banks in China will be encouraged to set up outlets in Russia, and Russian banks will be encouraged to do the same in China, Zhang said. At the same time, Russian Deputy Prime Minister Aleksandr Zhukov said Russia and China are working on using their own currencies to settle trade instead of using the dollar and euro...

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