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Given that you seem so confident in your theory you should be able to clearly explain why it's so important for the US that oil be traded in USD?

wolco 8y ago
Having the dollar serve as the world’s reserve currency has been a major subsidy to both the U.S. government and to Americans. Foreign governments and central banks are more likely to buy U.S. government debt, which allows the U.S. government to spend more money and run up deficits with a lower interest rate. The two biggest foreign buyers of U.S. government debt come from the governments of Japan and China. This has also been a major subsidy to Americans. In addition to foreign governments using dollars and buying up U.S. government debt, many immigrants in the U.S. will take dollars in the form of cash and send the currency to relatives in other countries. This actually serves as a deflationary effect, as it makes consumer prices cheaper for Americans in the U.S.
- friedman23 8y ago
  > Foreign governments and central banks are more likely to buy U.S. government debt, which allows the U.S. government to spend more money and run up deficits with a lower interest rate. Foreign government hold US debt because it's a safe store of value. America can access cheap debt because it has good credit. If oil was traded in another currency for some reason those countries would still buy US debt. > This actually serves as a deflationary effect, as it makes consumer prices cheaper for Americans in the U.S. Deflation isn't desirable firstly. Secondly, the federal reserve controls the money supply so more demand doesn't matter as the federal reserve will just decrease interest rates to maintain 2% inflation. It's amazing how prevalent conspiracy theorists are among people on this website. Also fyi, the amount of demand the Saudis have for the USD is a small percent (maybe a fraction of a percent) of global demand for USD. So Saudi Arabia deciding to trade oil in a different currency would have 0 effect on the US.
  - devdas 8y ago
    > Foreign government hold US debt because it's a safe store of value. US debt is a safe store of value, because cheap energy can only be obtained by paying in US dollars. If you remove that motivation, the USD is just another fiat currency.
    - friedman23 8y ago
      > US debt is a safe store of value, because cheap energy can only be obtained by paying in US dollars. haha ok, I don't even know how this statement makes sense in your head. It's like you believe the only reason the US economy is successful is because of oil being traded in USD. Ignore the mega corporations and the giant military.

wolco 8y ago

Having the dollar serve as the world’s reserve currency has been a major subsidy to both the U.S. government and to Americans. Foreign governments and central banks are more likely to buy U.S. government debt, which allows the U.S. government to spend more money and run up deficits with a lower interest rate. The two biggest foreign buyers of U.S. government debt come from the governments of Japan and China. This has also been a major subsidy to Americans. In addition to foreign governments using dollars and buying up U.S. government debt, many immigrants in the U.S. will take dollars in the form of cash and send the currency to relatives in other countries. This actually serves as a deflationary effect, as it makes consumer prices cheaper for Americans in the U.S.

friedman23 8y ago
> Foreign governments and central banks are more likely to buy U.S. government debt, which allows the U.S. government to spend more money and run up deficits with a lower interest rate. Foreign government hold US debt because it's a safe store of value. America can access cheap debt because it has good credit. If oil was traded in another currency for some reason those countries would still buy US debt. > This actually serves as a deflationary effect, as it makes consumer prices cheaper for Americans in the U.S. Deflation isn't desirable firstly. Secondly, the federal reserve controls the money supply so more demand doesn't matter as the federal reserve will just decrease interest rates to maintain 2% inflation. It's amazing how prevalent conspiracy theorists are among people on this website. Also fyi, the amount of demand the Saudis have for the USD is a small percent (maybe a fraction of a percent) of global demand for USD. So Saudi Arabia deciding to trade oil in a different currency would have 0 effect on the US.
- devdas 8y ago
  > Foreign government hold US debt because it's a safe store of value. US debt is a safe store of value, because cheap energy can only be obtained by paying in US dollars. If you remove that motivation, the USD is just another fiat currency.
  - friedman23 8y ago
    > US debt is a safe store of value, because cheap energy can only be obtained by paying in US dollars. haha ok, I don't even know how this statement makes sense in your head. It's like you believe the only reason the US economy is successful is because of oil being traded in USD. Ignore the mega corporations and the giant military.