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The dollar doesn't get its value from oil, it gets its value from being the sole currency accepted for your tax bill, i.e. its value derives from its tax base.

The dollar doesn't get its value from oil, it gets its value from being the sole currency accepted for your tax bill, i.e. its value derives from its tax base. That is why fiat works, it's what "by fiat" means, and why commodity backing is not necessary. The dollar has been a far better currency since gold backing was removed. Gold was and is a terrible currency.

partycoder 9y ago
It is more complicated than that. There's the relative value among different currencies (exchange rates).
- gnaritas 9y ago
  You're on HN, please don't assume only you understand the complexities of the world. Everything is more complicated than one simple thing, but you don't get to level that critique after claiming the value comes from oil. We're obviously talking about primary driver of value and for every fiat currency its primary value is in its tax base, not in any commodity backing. The values between currencies fluctuate short term because capital moves around, but that doesn't drive the value of a currency, it merely alters it a very tiny amount. Fundamental forces, i.e. government policies, control exchange rates long term as any currency trader will tell you however this isn't relevant to the topic as bringing up exchange rates is simply a deflection to avoid admitting or accepting that oil isn't why the dollar has value which was the point you made that is being refuted.
  - partycoder 9y ago
    You are downplaying the role of energy as just a mere commodity. Every single economic activity requires energy. Motorized vehicles in their majority use fossil fuels. By restricting oil trade to a specific currency, the US has a share of every productive activity involving motorized vehicles.
    - gnaritas 9y ago
      And back to moving the goal post. The discussion is about where the dollar's value primarily comes from, not about whether energy is more than just a commodity never mind that energy != oil as oil only makes up about ~4% of world energy production. The value of the dollar does not come from oil, it comes from tax payers, that's the truth; deal with it.

partycoder 9y ago

It is more complicated than that. There's the relative value among different currencies (exchange rates).

gnaritas 9y ago
You're on HN, please don't assume only you understand the complexities of the world. Everything is more complicated than one simple thing, but you don't get to level that critique after claiming the value comes from oil. We're obviously talking about primary driver of value and for every fiat currency its primary value is in its tax base, not in any commodity backing. The values between currencies fluctuate short term because capital moves around, but that doesn't drive the value of a currency, it merely alters it a very tiny amount. Fundamental forces, i.e. government policies, control exchange rates long term as any currency trader will tell you however this isn't relevant to the topic as bringing up exchange rates is simply a deflection to avoid admitting or accepting that oil isn't why the dollar has value which was the point you made that is being refuted.
- partycoder 9y ago
  You are downplaying the role of energy as just a mere commodity. Every single economic activity requires energy. Motorized vehicles in their majority use fossil fuels. By restricting oil trade to a specific currency, the US has a share of every productive activity involving motorized vehicles.
  - gnaritas 9y ago
    And back to moving the goal post. The discussion is about where the dollar's value primarily comes from, not about whether energy is more than just a commodity never mind that energy != oil as oil only makes up about ~4% of world energy production. The value of the dollar does not come from oil, it comes from tax payers, that's the truth; deal with it.