7 ms·

Besides the Iraq thing someone mentioned, Gaddafi in Libya got taken out right after he spoke about wanting to sell oil in euros. But most importantly, there's

by javert 5y ago

Besides the Iraq thing someone mentioned, Gaddafi in Libya got taken out right after he spoke about wanting to sell oil in euros. But most importantly, there's Saudi Arabia. Saudi Arabia has no military except the US military, and Saudi Arabia prices oil in dollars. It isn't conceivable that they could price oil in another currency and still receive protection from the US (i.e., continue to exist). The US kind of "has" to continue this arrangement because if the world stops trading oil in dollars, the demand for dollars plummets and the dollar crashes because there are just too many dollars out there. The Fed can't "suck in" all that excess money without causing a severe recession/depression.

nradov 5y ago
The US gains some minor benefits by providing the reserve currency used for most international oil trades. However that's only a small fraction of worldwide dollar use. Even if everyone switched to trading oil in euros tomorrow that wouldn't cause a dollar crash. https://foreignpolicy.com/2009/10/07/debunking-the-dumping-the-dollar-conspiracy/ https://foreignpolicy.com/2009/10/07/debunking-the-dumping-t...
- javert 5y ago
  This article is interesting and helpful. So, thanks. That said, I'm not 100% convinced. If we stop trading oil in dollars, doesn't that reduce the need for countries to keep dollars in reserve? It could be the beginning of a slippery slope.
  - notahacker 5y ago
    The amount of dollars kept in reserve to trade oil with certain petroleum exporters is a tiny proportion of total dollars in circulation What is useful is having quadrillions of dollars of other payment obligations denominated in dollars, from the IRS to mortgage debt to IMF loans to international financial markets to people paying cash rent in Ecuador, and a central bank that can raise interest rates if it believes the demand for dollars is falling. Sterling is still valuable, despite the fact it stopped being the main global reserve currency decades ago and the UK doesn't have any real ability to invade people to change that.
jcranmer 5y ago
> Besides the Iraq thing someone mentioned, Gaddafi in Libya got taken out right after he spoke about wanting to sell oil in euros. Source? Specifically, a source that can pinpoint a statement by a Libyan official in the immediate run-up to the intervention in Libya (i.e., late 2010 or early 2011) indicating a desire to switch to selling oil in euros. The closest I've ever seen to such a source is that one of the cables released in the Wikileaks leak reported that a source close to Sarkozy outlined a few reasons why he wanted to intervene of Libya, one of which was a desire to replace the CFA franc (effectively backed by France) with a gold-based Libyan dinar.
- atatatat 5y ago
  That's all I needed to see. And apparently it was enough for the Secretary of State's people to see, too.
  - jcranmer 5y ago
    I... am stunned why people think this in any way supports the narrative of petrodollar-supremacy. Because neither oil nor dollars are implicated in that string of statements at all. Especially GP's summary of the statement--"we bombed Libya because they wanted to price oil in euros instead"--is at complete odds with the implied statement here--"Libya wanted to move from euro-backed currency." Now it's important to note the context of the source. The diplomatic cables are--effectively--gossip reports. In general, they're not indications that anyone actually believes them, nor indications that their reports are causes for action. A report that a French president is concerned about threats to French suzerainty in its former African colonies is exactly the sort of thing that I'd go "right, I believe that... and I don't care." There is yet, to my knowledge, any evidence that this actually influenced US foreign policy in any manner whatsoever, let alone supports the petrodollar-supremacy narrative.
    - atatatat 5y ago
      If not supremacy of dollar, what reason do you hold dear for the toppling of yet another sovereign government in this case?
rmah 5y ago
Saudi Arabia has the fifth largest military budget in the world. They spend more than Germany, France or the UK. Their training and readiness probably isn't nearly as good, but to say they have no military is ... odd. More to the point, many nations sell oil for non-USD. It's quite common. Further, the oil trade is a small fraction of international USD movement. The idea that the "petrodollar" is a major factor in international politics is... unlikely to be true.
- javert 5y ago
  Wikipedia says the Saudis have the 9th largest defense budget in the world. They also have a decent sized army, navy and air force. TIL. I was under the impression that the Saudis literally didn't have a military, because the ruling family was afraid of coups.
  - nradov 5y ago
    Saudi Arabia has a large military to deal with external threats. And they also have a large and separate National Guard to protect the royal family from coups and terrorists.
- atatatat 5y ago
  > many nations sell oil for non-USD Name the largest, why obfuscate?
- atatatat 5y ago
  They have exactly as much military as they purchase from US and Israeli contractors/loan from militaries.
unmole 5y ago
> Saudi Arabia has no military except the US military This laughably wrong.
- javert 5y ago
  The conversation has moved on (meaning, you're right, and it's already been pointed out and discussed by others). You should read the other comments before you add your own.

by javert 5y ago

nradov 5y ago

The US gains some minor benefits by providing the reserve currency used for most international oil trades. However that's only a small fraction of worldwide dollar use. Even if everyone switched to trading oil in euros tomorrow that wouldn't cause a dollar crash. https://foreignpolicy.com/2009/10/07/debunking-the-dumping-the-dollar-conspiracy/ https://foreignpolicy.com/2009/10/07/debunking-the-dumping-t...

javert 5y ago
This article is interesting and helpful. So, thanks. That said, I'm not 100% convinced. If we stop trading oil in dollars, doesn't that reduce the need for countries to keep dollars in reserve? It could be the beginning of a slippery slope.
- notahacker 5y ago
  The amount of dollars kept in reserve to trade oil with certain petroleum exporters is a tiny proportion of total dollars in circulation What is useful is having quadrillions of dollars of other payment obligations denominated in dollars, from the IRS to mortgage debt to IMF loans to international financial markets to people paying cash rent in Ecuador, and a central bank that can raise interest rates if it believes the demand for dollars is falling. Sterling is still valuable, despite the fact it stopped being the main global reserve currency decades ago and the UK doesn't have any real ability to invade people to change that.

jcranmer 5y ago

> Besides the Iraq thing someone mentioned, Gaddafi in Libya got taken out right after he spoke about wanting to sell oil in euros. Source? Specifically, a source that can pinpoint a statement by a Libyan official in the immediate run-up to the intervention in Libya (i.e., late 2010 or early 2011) indicating a desire to switch to selling oil in euros. The closest I've ever seen to such a source is that one of the cables released in the Wikileaks leak reported that a source close to Sarkozy outlined a few reasons why he wanted to intervene of Libya, one of which was a desire to replace the CFA franc (effectively backed by France) with a gold-based Libyan dinar.

atatatat 5y ago
That's all I needed to see. And apparently it was enough for the Secretary of State's people to see, too.
- jcranmer 5y ago
  I... am stunned why people think this in any way supports the narrative of petrodollar-supremacy. Because neither oil nor dollars are implicated in that string of statements at all. Especially GP's summary of the statement--"we bombed Libya because they wanted to price oil in euros instead"--is at complete odds with the implied statement here--"Libya wanted to move from euro-backed currency." Now it's important to note the context of the source. The diplomatic cables are--effectively--gossip reports. In general, they're not indications that anyone actually believes them, nor indications that their reports are causes for action. A report that a French president is concerned about threats to French suzerainty in its former African colonies is exactly the sort of thing that I'd go "right, I believe that... and I don't care." There is yet, to my knowledge, any evidence that this actually influenced US foreign policy in any manner whatsoever, let alone supports the petrodollar-supremacy narrative.
  - atatatat 5y ago
    If not supremacy of dollar, what reason do you hold dear for the toppling of yet another sovereign government in this case?

rmah 5y ago

Saudi Arabia has the fifth largest military budget in the world. They spend more than Germany, France or the UK. Their training and readiness probably isn't nearly as good, but to say they have no military is ... odd. More to the point, many nations sell oil for non-USD. It's quite common. Further, the oil trade is a small fraction of international USD movement. The idea that the "petrodollar" is a major factor in international politics is... unlikely to be true.

javert 5y ago
Wikipedia says the Saudis have the 9th largest defense budget in the world. They also have a decent sized army, navy and air force. TIL. I was under the impression that the Saudis literally didn't have a military, because the ruling family was afraid of coups.
- nradov 5y ago
  Saudi Arabia has a large military to deal with external threats. And they also have a large and separate National Guard to protect the royal family from coups and terrorists.
atatatat 5y ago
> many nations sell oil for non-USD Name the largest, why obfuscate?
atatatat 5y ago
They have exactly as much military as they purchase from US and Israeli contractors/loan from militaries.

unmole 5y ago

> Saudi Arabia has no military except the US military This laughably wrong.

javert 5y ago
The conversation has moved on (meaning, you're right, and it's already been pointed out and discussed by others). You should read the other comments before you add your own.