27 ms·

Ghana plans to buy oil with gold instead of dollars

179 points by quyleanh 4y ago

aa-jv 4y ago
This is great news for the people of Ghana .. and I hope it serves as an example for many other nations to come. The era of enslavement to the petrodollar is over.
kaladin_1 4y ago
Interesting the pressure is increasing. More and more countries questioning why they need to base their foreign transaction on the US Dollar. Could this mounting unrest be as a result of the seeming inability of the US Federal bank in checking inflation of the US Dollar. Also, some of these Nations can no longer determine what benefit it is to them is using the US Dollar as their reserve currency and trading currency. Some nations might have alternative properties/currencies that would favour their external trade but yet they are stock with the Dollar and must defer to the US in all that concerns it. I would really love someone more knowledgeable to make a prediction as to where all these could be going. Do you see a country like Saudi going off the USD? Do you think the West-African countries relying on CFA will turn away from that any time soon? Is there a case to be made why these nations should maintain the status quo?
- hdhdxkfchsk 4y ago
  saudi? no. they are the only elites not tied to petrodollar by force but by financial incentives. all the others probably no as they will see the new gana embargo :( the terms first world and second world were originally coined to means country under petrodollar and countries under ussr. third world was a term that meant free for all to the to two powers.
- qikInNdOutReply 4y ago
  Could this lead to a chain reactions, were countries abandon the dollar and the dollar looses in value, in return leading to more countries abandon it? A world were the most stabilizing region and its currency become temporary hegemon?
  - Isinlor 4y ago
    Ghana GDP is 77.59 billion USD. That's almost 2 Twitters :) . Ghana is not triggering any chain reactions.
    - speedylight 4y ago
      Lucky for them, otherwise the US would’ve sent some freedom and democracy their way.
      - hardlianotion 4y ago
        Seems unlikely.
    - nequo 4y ago
      Ghana's GDP is flow while Twitter's valuation is stock.[1] Given that Twitter's EBITDA was $211mn, it is more accurate to say that Ghana's GDP is 368 Twitters. (Which also sounds crazy nevertheless.) [1] https://en.wikipedia.org/wiki/Stock_and_flow https://en.wikipedia.org/wiki/Stock_and_flow
      - KptMarchewa 4y ago
        I agree that GDP-stock comparison is not good, but why compare to EBITDA rather than revenue or expenses?
        nequo 4y ago
        I'm not going to say that I have strong views on this right now. But the reason I used EBITDA is that GDP is the total value added of the economy. EBITDA is the total value added of the company.
        Majromax 4y ago
        > EBITDA is the total value added of the company. I don't think that's quite the right interpretation. EBIDTA is the value added of the company net its employees (and I'd quibble over depreciation and taxes), whereas GDP includes the labour share. Imagine we had a single-company country, where every worker was also a customer, all costs were internalized, and capital did not depreciate. The GDP of the country would be equal to the profit of the company plus the wages of the employees. Using the EBITDA equivalence, however, the GDP of the one-company country would be more (possibly far more) than "the one company's earnings."
- ur-whale 4y ago
  >Do you see a country like Saudi going off the USD? Going off, certainly not (why would they?) But exchanging their oil for other currencies, absolutely. What will be interesting is how long the Sauds will remain in power once they agree to exchange their oil against other currencies. Historically, all regimes that made that decision were or are in the process of being taken down either directly by the US or a combo of their close allies (see: Khadafi, Saddam Hussein, Vlad Putin, etc...)
  - pjc50 4y ago
    Russia's sanctions were as a result of their invasion of Ukraine and they'd still be a part of the normal financial system otherwise. It's nothing to do with petrodollars.
    - ur-whale 4y ago
      Apologies, but your reading of the situation is shallow. What do you think led Vlad to invade? The US has been mounting a proxy war against Russia in Ukraine for the past 20 years, one they're ready - barring political upheaval in the US - to fight down to the last European.
      - pjc50 4y ago
        Overconfidence and a need for an external enemy? Satanism? https://www.atlanticcouncil.org/blogs/ukrainealert/nato-nazis-satanists-putin-is-running-out-of-excuses-for-his-imperial-war/ https://www.atlanticcouncil.org/blogs/ukrainealert/nato-nazi... > proxy war against Russia in Ukraine To a certain extent this is true, but the Ukranians have been very keen on it as they've benefited from not being a puppet state run by a corrupt president who built himself a huge palace. And Russia has no right to be "in" Ukraine in the first place.
      - _kbh_ 4y ago
        > What do you think led Vlad to invade? There are vast natural resources in Ukraine which threatens Russias place as the gas station to the world. They also have imperialistic ambitions to try and restore what they see as the glory days of the USSR.
- spaceman_2020 4y ago
  If you look at the actual numbers, you'll find that USD dominance is still unchallenged. BUT, there is definitely way more chatter about alternative payment options, including from well-placed government sources and central banks in important non-west allied countries. It's now a matter of "when", not "if" when an alternative currency pops up, maybe a BRICS currency.
  - UltraViolence 4y ago
    I believe the war in Ukraine has permanently damaged the USD's dominance in the medium to long term. The use of a supposedly neutral financial network (SWIFT) as a sanction weapon will make other nations who aren't on good terms with the U.S. and the West (and not just the "usual suspects" but many nations in Africa and South America too) seeking alternatives. As previously mentioned, Bitcoin is a viable alternative. But there may be others. In any case I see nations ganging up to create an alternative to the SWIFT network, potentially undermining its usefulness.
    - immibis 4y ago
      Why would countries that don't plan to commit genocide need to be bothered by SWIFT cutting off countries that commit genocide? In fact, this is a good thing for countries that don't want to be genocided as it provides an additional incentive against genocide.
      - ilammy 4y ago
        Because who knows what’s on the list of excommunicatable offenses. Today it’s war of aggression, 40 years later on not enough diversity and inclusion could qualify, or the eagle knows what else. Hope for the best prepare for the worst.
      - spaceman_2020 4y ago
        > "No one knows with certainty how many people have been killed and wounded in Iraq since the 2003 United States invasion. However, we know that between 184,382 and 207,156 civilians have died from direct war related violence caused by the U.S" [0] Is it only a genocide if a non-western ally does it? 0: https://watson.brown.edu/costsofwar/costs/human/civilians/iraqi https://watson.brown.edu/costsofwar/costs/human/civilians/ir...
- ben_w 4y ago
  I'm only at the level of guessing for topics like this, but my guess is that a chain reaction is more likely to see a switch from USD to Renminbi than a switch to gold (or Euros). China because of the potential assuming similar GDP/capita as the current USA. Not soon because I expect as a prerequisite for change being the new winner's GDP to be dominant rather than just joint top 3 in a ranking system that changes their ordering depending on what you value most. Not gold because the justifications given for why we all stopped using the gold standard in the fist place, still seem to apply.
  - tcbawo 4y ago
    Do you think GDP is the critical factor for determining a global reserve currency? IMO, respect for property ownership rights, legal/judicial recourse, ubiquity of US banks, and political stability are large contributing factors that few other countries can compete with. China has a pretty checkered past regarding ownership rights for citizens who are critical of its leadership.
    - deleted 4y ago
      [deleted]
    - 988747 4y ago
      Property rights and such are secondary. The primary issue is: who has the power? Right now the answer to that question is "US", but since China is catching up on GDP, and, unlike US, actually manufactures things. If China decides that they want payments for all the goods that they export to be in RMB then there's nothing the rest of the world can do about it, except stop all the imports from China (which would take decades, because they have to learn to manufacture all those goods themselves). Once most of your imports come from China instead of the US it does make sense to use Chinese currency as the reserve currency, since you are going to need a lot of RMB to pay for your imports anyway.
      - matthewdgreen 4y ago
        Saudi Arabia (to pick a major oil exporter) imports about 20% of its goods from China. But it also imports vastly more from regional partners and the US and Europe, not to mention that it depends on the US to secure all of its oil exports to China across thousands of miles of vulnerable ocean routes.
- edwnj 4y ago
  Its definitely not a lack of confidence in USD or the feds. Relative to pretty much every noteworthy alternative, the feds have handled things a lot better. - EU royally f'd with their stimulus & rates. Mind you, they were in a very precarious position to start with. - China has proven themselves to be a house of cards with zero covid, massive public/corporate debt bubbles and Ji becoming god emperor. - Russia is a glorified gas station with an economy the size of florida. The reason for Ghana's action, Saudi looking to end petro dollar, China+Russia looking to form a block etc: US deep state ducking up big time. The weaponised the dollar.. They've been ramping this up big time during the past few decades but the Ukraine War was a UUUUGE reveal the cards moment. During the last 2 years, Russia was filling up their coffers with high oil prices. The US turned these foreign reserves into worthless numbers on a screen overnight with the press of a few buttons. Now pretty much every country is looking at each other like "oh shit".
- rich_sasha 4y ago
  I think this take is somewhat over-reacting. I'm pretty sure you'll find that the price they agreed is really in USD, and only the medium of exchange is gold (even if the paperwork or agreement doesn't even reference USD). So really they are paying X USD's worth of gold - with both oil and gold price being fixed in USD somewhere abroad. USD is so incredibly ubiquitous, it won't easily go away. Reserves are a little different, but even then, whenever something bad happens, the dollar strengthens as investors flock to it. When the 2008 crisis happened (and it was US-centric!) US and the dollar were still the safe haven everyone escaped to. Not the Rouble, not the Yuan, not so much EUR or CHF or, from memory, gold. So we'll see people avoid the USD as a medium of exchange, maybe, even if the prices are fixed on USD-denominated prices. But also remember, gold is not a great medium of exchange. Will Ghana ship physical gold around the world (risky and expensive)? Or will they sign a piece of paper saying "gold held by in a safe by someone else and owned by me is now owned by someone else" - in which case there is similar counterparty risk, except perhaps not against the US government. But if you think the US is an evil octopus with long tentacles, surely they could get their hands on this gold. Where will this haven safe from US interference be? If anything, I can more easily believe an alternative economy based on crypto. It's actually happening and working well, for all sorts of shady or illicit activity.
  - kibwen 4y ago
    > Or will they sign a piece of paper saying "gold held by in a safe by someone else and owned by me is now owned by someone else" - in which case there is similar counterparty risk, except perhaps not against the US government. The US holds a quarter of all the known gold reserves in the world, and has more gold than the next three countries combined, so there's a decent chance that Ghana's gold is already in the US.
  - bobthepanda 4y ago
    EUR is still not a great managed currency. The Euro crisis could, technically, happen again. RUB backing economy is pretty much one major export. JPY makes American debt look chaste in comparison CHF does not want the job, primarily because its use as a basket currency already makes it too strong CNY does not want the job, and their past history of capital controls make America look chaste
- edwnj 4y ago
  As for what happens next: de-globalisation I predict we'll see blocks forming up again, something like: - West (US+EU) - East (China+Russia) - India (India, Sri Lanka, Himalayan States, South China states) - Middle (Middle East+North Africa) - Latam (Central + South American States) One wild card IMO would be the rise of the Indian sphere of influence. I'll leave some room for India's remarkable ability to snatch defeat form the jaws of victory. If they don't f this up, they have UUUGE tailwinds going for them. Middle east is overrated IMO, its like an oasis with oil instead of water. When the oil money runs out, not gonna be fun any more. Latam is probs the biggest wildcard, even bigger than India. They don't need a lot of things to be right to wildly outperform as a block. Just like the US, they are protected by two oceans so they can choose to not involve themselves in stuff. Africa is highly overrated IMO, the entire continent is cursed in multiple ways. If u compare africa to another post colonial continent like Latam, africa is in a place where they need to get so many things right to just survive, let alone to catch up.
  - thisiscorrect 4y ago
    I agree with the general premise of your comment, that this is a small sign of the deglobalization which is _already_ under way. But, what are the UUUGE tailwinds benefiting India? India, even more so than China, seems likely to "get old before it gets rich." Its TFR is already below replacement and falling rapidly.
    - KptMarchewa 4y ago
      China's official TFR figures are massively engineered: https://www.project-syndicate.org/commentary/chinese-population-smaller-than-stated-and-shrinking-fast-by-yi-fuxian-2022-07 https://www.project-syndicate.org/commentary/chinese-populat... India ones are still over replaceability.
      - thisiscorrect 4y ago
        https://www.google.com/search?q=india+total+fertility+rate https://www.google.com/search?q=india+total+fertility+rate tells me India's is 2.18, below the modern replacement TFR rate of 2.3 [1]. [1] https://en.wikipedia.org/wiki/Total_fertility_rate#Replacement_rates https://en.wikipedia.org/wiki/Total_fertility_rate#Replaceme...
- sys_64738 4y ago
  You ultimately need to pay in some common currency so which common currency do you trust to be secure from inflationary pressures or government interference? Do you trust the Euro to not implode? Do you trust the Chinese Communists with their Yen manipulation? The US dollar is the last currency standing after all others are disqualified.
- Spooky23 4y ago
  Unlikely. Ghana happens to be a gold producer; they may see this as a better deal for them, and may get some other benefit from a country like China for rattling the cage.
  - colechristensen 4y ago
    What’s more likely is that Ghana is using monetary policy as a cover for acquiring locally produced gold at a lower price and selling it abroad for resources to make up for trade deficits.
- norswap 4y ago
  > Could this mounting unrest be as a result of the seeming inability of the US Federal bank in checking inflation of the US Dollar. This is completely backwards. The problem right now is that the dollar is too strong, meaning expensive wrt other currencies. In this context, inflation of the USD supply, leading to devaluation of the USD would actually help other countries that are suffering from the strong dollar. I'm not saying it would be good for the US, but it certainly would be good for pretty much everybody else.
  - danielschonfeld 4y ago
    And there in lies the rub. To keep countries placated we need to create more debt, a metric ton of more debt and hence more broad currency. But doing so at the moment is political suicide as is proven by the left's efforts (deficit spending blah blah etc). Triffin paradox predicted in the 60s at it's full glory. It's also worth noting that at the moment both the Fed and the Treasury (obv) are mandated to be operating with an inward looking view only. Meaning we run a global reserve currency with no 'department' in charge of the global part.
    - kyboren 4y ago
      I don't think this should be downvoted. I believe this is all 100% correct. Maybe because of the "left's deficit spending" part, which is not wrong, but ignores the right's historical deficit spending (e.g. TCJA). Or perhaps the "political suicide" part is misinterpreted: It would be political suicide for a politician to interfere with Fed policy and undercut their blunt force effort to reduce domestic inflation. But any way you slice it, right now the Triffin dilemma is indeed exactly what we're experiencing.
    - jacooper 4y ago
      And this the entire problem. The dollar shouldn't be a global currency.
      - colechristensen 4y ago
        Why? The eurozone can’t hold itself together, China is a house of cards with bad planned economy failures, the uk isn’t worth mentioning any more, and everywhere else either has unstable economies or economies based on volatile or limited lifetime commodities. The dollar is the global reserve currency because the US has centuries of reasonable behavior and military and natural resources that guarantee long term stability. There isn’t a better option unless you’re playing temporary political games or if your macroeconomic situation is so bad you can’t play the game normally.
- 0x445442 4y ago
  I think it’s more an issue of other countries seeing that the U.S. can just confiscate their dollar reserves if the US doesn’t agree with their sovereign actions. Those countries are choosing to divest from the mono world order which is crumbling. For a long but instructive discussion on current economic events check out this interview. https://youtu.be/cD_UcRtljDU https://youtu.be/cD_UcRtljDU
  - KptMarchewa 4y ago
    US can confiscate your dollar reserves if you keep those dollars in the US, just as they can confiscate your gold reserves if you keep them in the Fort Knox. >sovereign actions Nice euphemism for genocidal, imperialist war.
    - 0x445442 4y ago
      > Nice euphemism for genocidal, imperialist war. You’re referring to the U.S. right?
      - KptMarchewa 4y ago
        >You’re referring to the U.S. right? You must claim to be very sarcastic! No, I'm refering to only country in XXI century that literally decided to annex other country's territory - two times. All that while losing war, and deciding to unleash hell on civilians they claim to be "their kin". At least we can cheer our hearts looking at fields littered with dead russian soldiers and see that there are countries of the world that won't leave those who need help alone. https://twitter.com/PaulJawin/status/1596033997334872064 https://twitter.com/PaulJawin/status/1596033997334872064
        cauefcr 4y ago
        So the US policy on Latin America is just fine? Embargoes and CIA financed take-over of many states are all fine?
        4y ago
- UltraViolence 4y ago
  Saudi Arabia isn't going off the USD. That would seriously undermine their relation with the U.S. and could even have them branded an antagonistic nation. The dominance of the USD is EXTREMELY important to the U.S. and I can assure you that Washington is even willing to wage war over it. But I believe the ball has already started rolling with Bitcoin and Russia's demand for payment in Rubles.
  - pirate787 4y ago
    LOL Bitcoin is a joke, its down 65% against the dollar this year
    - luciusdomitius 4y ago
      And it is going to fall more after the rug pull about to happen. Still, even in its worst, it is doing well against TRL, ARP, etc. And those are currencies used by many tens of millions.
    - UltraViolence 4y ago
      FTX's collapse has left its mark, but this will only be temporary. Bitcoin is already demonstrating its usefulness by helping countries evade economic sanctions. There are a truckload of nations who're fed up with the West's financial dominance and are actively seeking alternatives.
      - jen20 4y ago
        > FTX's collapse has left its mark, but this will only be temporary Bitcoin was down well in advance of the FTX collapse. The reason it is down is because it's a Ponzi scheme, and an unconscionable waste of resources so that cryptobros can LARP at being a libertarian.
        andirk 4y ago
        > The reason it is down is because it's a Ponzi scheme Is the rest of the stonks also a ponzi scheme? Because if you didn't notice, those are also very down.
- Zigurd 4y ago
  The reason US$ denominate most trade is that without what is broadly referred to as "The West" global trade would not move. Trade would not be protected by a web of alliances among developed nations. If that goes away, ships would not be insured. Uninsured ships would be lost to pirates and rogue nations. Prices would jump sharply. Supply chains would have to go back to warehousing enough supply to withstand disruptions. Warehoused parts would become stranded assets when products change. Growth would be choked off. This is not an excuse for imperialism and crony capitalism that exploits developing nations. Especially in how multinational oil companies corrupt entire nations. Working toward the end of fossil fuels will hasten them losing their power. But the lesson of this year is that those dull bureaucratic things like NATO and the EU are what keeps fascistic autocrats contained and gives aggressor nations the thrashing they deserve. Even the Tories are realizing they got played by Putin's plan to divide the nations that could hold him back.
- luciusdomitius 4y ago
  The petrodollar is a really weird thing. According to its critics, it is a global monopoly on violence and pure extortion, to its implementors - merely a conspiracy theory. Please, before you clinge to the conspiracy theory label, check how many great people such as de Gaulle have whined against it and what is Privilege l'exorbitant in French political science. In reality, global trade is not in USD purely because it is backed by carriers and they can invade anyone, but because this navy also protects shipping lanes and offers international rule of law. Remember when the US took a break in the gulf of Aden and it took us Europeans (+Russia and token help from US!!) years to agree and secure it. So, things are not black and white. Anyway, this system is collapsing from within and will be replacing. The success of the S.Arabia pivot is going to merely decide if it happens in 10 or 20 years time. Btw does anyone know how did the MBS-Xi meating go?
  - imtringued 4y ago
    The exorbitant privilege thing is kind of strange when countries voluntarily demand more dollars or even borrow dollars. The "privilege" is only exorbitant if you are the only survivor of a world war.
  - eunos 4y ago
    > Petrodollar Is rather remnant of the past. FYI I think half of world forex reserve is held in the 5 entities in East Asia (CN, JP,KR,TW,HK). Whatever dollar the Petrostate get (sans Russia) they recycled it to various goods and services mostly sourced from East Asia. > Btw does anyone know how did the MBS-Xi meating go? Will commence in December, previously rumored didn't happen
- jonnybgood 4y ago
  Ghana isn’t questioning anything. They’re just running out of USD.
- SuoDuanDao 4y ago
  Somewhere in my comment history I made the prediction "It will be possible to buy large amounts of oil without USD by 2024" - so I think I've got a decent track record on this subject. I'm much less confident in these predictions than that one, but I'll predict Saudi Arabia won't go off the USD because they depend on US military support in a pretty warlike part of the world and the CFA will be replaced by 2027 as currently planned without any major interference from the European powers. As for a case for maintaining the status quo - The example made of Ghaddafi comes to mind.
  - snovv_crash 4y ago
    CFA? What are you referring to here, not the financial certification institution I'm guessing?
    - SuoDuanDao 4y ago
      had to google it too: https://en.wikipedia.org/wiki/West_African_CFA_franc https://en.wikipedia.org/wiki/West_African_CFA_franc
  - nivenkos 4y ago
    The US is exploiting it to the maximum with the Inflation Reduction Act, etc. The rest of the world will react eventually, the Zelenksy-Putin puppet show will only distract them for so long.
- dehrmann 4y ago
  > More and more countries questioning why they need to base their foreign transaction on the US Dollar. For spot transactions, it doesn't really matter beyond giving the buyer and seller a common language to negotiate in. For contracts sometime in the future, if you're Argentina, no one wants to bet on where the Peso will be in 6 months.
- deleted 4y ago
  [deleted]
GoOnThenDoTell 4y ago
Im curious about the mechanics of how this helps, could they not sell the gold for dollars to buy the oil?
- 4pkjai 4y ago
  I think the reason they want to avoid the US dollar is so that they do not need to obey US sanctions. From what I understand, if you send US dollars around the world, they need to go through a US bank. All US banks must obey US government sanctions.
  - pjc50 4y ago
    Ghana are not subject to sanctions?
    - djbebs 4y ago
      Right now. Can you guarantee that will always be the case we'll into the future?
    - elzbardico 4y ago
      They may want to buy things like fertilizers or wheat from a sanctioned entity, Russia coming to mind.
  - fmajid 4y ago
    They don't want to avoid the dollar, far from it, they want to keep the few dollars they still have and pay with something else instead. Now, if I were the Chinese with an overabundance of dollars (or worse, US Treasury bonds), I'd be trying to convert them into something else ASAP. They tried to buy companies, agricultural land and other things with intrinsic value, but were blocked by CFIUS and the EU is setting up its equivalent.
  - fuzzfactor 4y ago
    Right now dollars are skyrocketing in value compared to their own currency. For them dollars earn much more being held rather than being invested in most other things within reach. They can dig up more gold from their own mines which they're always doing anyway regardless of its prevailing price.
ur-whale 4y ago
The hegemony of the dollar as a reserve currency is finally coming to an end, and while many will disagree with my opinion, I believe it's a very good thing for the world. The US has been allowed by the rest of the world to use the dollar as a weapon since the end of WWII, specifically using it to impose unilateral economic sanctions on anyone they don't like, thereby flouting or downright ignoring other countries sovereignty in the process. The have also used the privileged status of the dollar to gain systematic, unfair and generally undeserved economic advantage in international markets. They have also used this advantage to create a completely unsustainable amount of debt which the US will never be able to repay now that the dollar is becoming just another currency. Picasso was famous for writing checks, knowing fully well that they would never get cashed out because, bearing his signature, there was an intrinsic demand for them and the thing would be kept as is by the owner. US dollars are very similar to Picasso's checks in the sense that foreign country all keep large amounts of US currency reserve and debt instrument, but they never "cash them out" (exchange them for US-based hard assets such as land and businesses). The world has allowed this to happen for near 70-ish years because the for the longest time, the US was perceived by a large part of the world as a force for good. That ship has sailed though, and in 2022 it's getting pretty hard to find folks outside of the US that view it as a force for good anymore (or just don't downright hate their guts with a passion). To be a useful tool, a currency should be, among other things: a) managed in a sane manner (as in: the amount issued should be on a fixed schedule, as per Milton Friedman) b) not used to tilt the playing field c) essentially politically neutral, and in particular managed by an entity not in any way controllable by the government. The US dollar doesn't meet any of these criteria, and the chicken are now coming home to roost and the dollar will slowly lose it's privileged status among world currencies, slowly being replaced by a bunch of other. Good riddance.
- dragonelite 4y ago
  Wondering what will replace it, maybe the Brics coin a basket of currencies and commodities. A bit like Keynes Bancor concept if i'm not mistaken time will tell what sort of currencies the Russians and Chinese will introduce for BRICS, SCO and BRI nations.
  - 4y ago
llampx 4y ago
Regime change in 3... 2...
- jerkstate 4y ago
  Don't necessarily even need to plan for a new regime. Libya tried this and now they are a failed state with open air slave markets.
  - luciusdomitius 4y ago
    https://www.theguardian.com/business/2003/feb/16/iraq.theeuro https://www.theguardian.com/business/2003/feb/16/iraq.theeur... :D
- rightbyte 4y ago
  Ye ... It would not surprise me even a little bit.
pwm 4y ago
I know a lot of people dislike bitcoin here but I'm wondering (with the huge assumption that its value stabilises over time) would it not actually be a better solution? Not just from an obvious logistical but also from an environmental perspective? I'd imagine gold mining to be much more destructive (both to nature and to human life).
- fendy3002 4y ago
  I wonder if they can use it? As a noob I see that crypto value is very volatile and don't have intrinsic value, unlike gold that somehow is accepted universally as valuable.
  - tremarley 4y ago
    It has intrinsic value as it requires work to mine it. It is impossible to generate more whenever you want. You can spend bitcoin in every country, it's valuable everywhere.
    - andsoitis 4y ago
      > It has intrinsic value as it requires work to mine it. All work isn’t equally valuable. Some work is worth nothing. > It is impossible to generate more whenever you want. Value and wealth do not only arise from scarcity.
- senectus1 4y ago
  The crypto market (including btc) is incredibly fragile. It's also got way too shallow a gene pool (meaning too few hold too much). Until it gets spread further and wider it can't be relied on for much.
- Ekaros 4y ago
  And why give all that wealth away to current holders? Nothing actually make bitcoin inherently valuable on nation-state level. Gold is fine for now and maybe in future some new agreed upon commodity-current basket currency.
- 4y ago
peter-m80 4y ago
Honest question: Can someone explain me why using gold instead of dollars to buy oil isn't the same as sell gold for dollars and use those dollars to buy oil?
- Ekaros 4y ago
  For two parties to transact in dollars they need either to physically hold large amounts of dollars. Or have access to some shared ledger that is accounting system where transactions can happen. Say A, B, C account. A sells gold and get dollars from account B to account A. And now they can buy oil from owner of account C. But who owns and runs these accounts or the transactions between them? One option is SWIFT system. Which Russia got excluded in some capacity from. As such it is clear that system cannot be trusted. Value of dollars there are very unlikely to be good for long term. And same applies to any accounts in banks in western influence sphere. Thus directly transacting is better option in long run. For any country that wants to keep their economy stable.
  - lvl102 4y ago
    - Sargos 4y ago
      Putting your entire economy at risk of being turned off advisory due to unknown future political disputes is a risk to the sovereignty of nearly every country in the world. Many countries are now looking for alternatives after the neutrality of swift/the dollar was eliminated.
    - Ekaros 4y ago
      No. I'm not thanks for ad-hominem though.
  - giaour 4y ago
    > One option is SWIFT system. Which Russia got excluded in some capacity from. As such it is clear that system cannot be trusted. That is quite a leap. Russia was also excluded from the NY stock exchange due to the ongoing sanctions; does that mean we can no longer trust stocks bought and sold there?
kumarvvr 4y ago
Realistically, how much gold does Ghana have to actually sustain this long term? Would they be trading in Gold for other exports?
- missedthecue 4y ago
  The are the 6th largest gold producer globally
freddealmeida 4y ago
It won't happen.
tiahura 4y ago
To all opining about the ongoing demise of the dollar, please take a look at a 10 year DXY chart. Executive summary: It’s stronger than ever.
- hmate9 4y ago
  1) it was much stronger in 1985 2) just because it’s strong now doesn’t mean it cannot ever fail. Ray Dalio’s new book might interest you as he breaks down past world powers and how their currencies (which were global reserve currencies at the time) collapsed
- Rexxar 4y ago
  Higher price and higher usage are not the same thing, a less used dollar would not necessarily have lower value. The evolution of foreign exchange market turnover would be a better indicator to look at : https://en.wikipedia.org/wiki/Currency_pair#Base_currency https://en.wikipedia.org/wiki/Currency_pair#Base_currency // https://www.bis.org/statistics/rpfx22_fx.pdf https://www.bis.org/statistics/rpfx22_fx.pdf (it's also increasing in the 3 last years)
simple-thoughts 4y ago
For people saying that this is a sign of the dollar dominance ending consider this. Gold is valued in dollars. Oil is valued in dollars. Any gold for oil exchange will be decided by the going dollar rate of each. Counter parties and middlemen assisting this trade will be hedging their positions with dollar settled derivatives traded on deep and liquid dollar markets.
- hmate9 4y ago
  Gold isn’t valued in dollars. You can sell gold for any currency. Oil is primarily transacted with dollars because it’s the worlds reserve currency. But if that were to change to whatever, you can still sell your oil and gold for whatever the new dominant currency is. Meanwhile your dollar is (presumably in this case) worth way less in terms of buying power than when you first bought it.
  - simple-thoughts 4y ago
    You can always barter anything for anything else, but how do you decide the rate to barter at? It’s determined by the rate for the most liquid markets for the two sides, because the price of an asset in the most liquid market is the price all other markets will follow. There just aren’t gold based markets that are even remotely comparable to usd ones, so the ratio of gold to oil is set by their respective rates in usd. To see an actual switch from usd to gold for valuing oil, you’d need to see the market liquidity migrate from usd/oil pairs to gold/oil pairs. Ghana making a political statement isn’t that.
- themihai 4y ago
  >> Gold is valued in dollars. Oil is valued in dollars. If a long term contract is signed it protects you from dollar's inflation/volatility as the contract used gold as currency. I think this is important as tomorrow Fed's decision is no longer that important for your energy costs. The more important part is that if enough contracts are signed in gold(highly unlikely given U.S's oil exports) then the dollar is no longer relevant to the oil price.
  - 4y ago
deleted 4y ago
[deleted]
fernandohur 4y ago
Small reminder: ghana's consumption of oil is 0.1% of the worlds total oil consumption (Source: https://www.worldometers.info/oil/ghana-oil/ https://www.worldometers.info/oil/ghana-oil/), essentially a rounding error. Take this into account before making any statements about the ending dominance of the dollar.
- SQueeeeeL 4y ago
  Ahh yes, small changes never preclude larger shifts in large geopolitical entities. But also if anyone tells you they know the future, they're probably trying to sell you something. If I were in charge of Ghana's finances, I'd be pretty cautious of standing in front of any windows for the next few years.
  - notahacker 4y ago
    Small changes preclude absolutely nothing happening far more often, and the imminent demise of the petrodollar has been forecast for fifty years involving some much more seismic events than a country with gold mines and a severe dollar reserve shortage and debt problem proposing that gold might solve their problem. At least the half dozen "gold dinar" projects had a bit of global ambition and a theoretical rationale for the religion of much of the world's oil exporting economies to participate.
  - imtringued 4y ago
    Brexit was supposed to be the end of the EU.
    - deleted 4y ago
      [deleted]
    - InCityDreams 4y ago
      >Brexit was supposed to be the end of the EU. I always considered Brexit to be the end of the UK's involvement in the EU? Your source(s)?
UltraViolence 4y ago
We'll see the dominance of the USD erode in the next three decades is my prediction. Look at how successful Putin was in demanding payment for Russian oil in Rubles. It has propped up the Ruble enormously and its predicted collapse hasn't occurred. In fact it has rallied. I assure you that other nations have taken note and will take similar steps in the future. Other commodities may well be priced in local currencies of the producing nations. Think gold, diamond, gas, oil, timber, wheat.
- oj2828 4y ago
  Russia had to raise interest rates to 20% to achieve the recent appreciation. Russia is giving up economic growth for the foreseeable future to prop up its currency. I doubt many countries are eyeing a similar move
  - somenameforme 4y ago
    They raised them to 20% for one month in the face of a nuclear economic strike. Their rates are down to 7.5% which are close to nominal for them. Remaining effects are a 3% GDP decline and a 12% inflation rate trending downward from a peak of 18% following the attack. The overall impact seems to be fading to zero relatively quickly, excepting a much stronger ruble. Future growth numbers will be interesting to follow. Much could shift radically one way or the other depending on oil prices, but the US seems to have a declining level of influence with OPEC+.
    - The_Colonel 4y ago
      > Remaining effects are a 3% GDP decline It's 3.9% (which rounds up to 4%, not to 3%) this year and 5.6% next year. This forecast is based on figures kindly provided by Russian authorities, which in times of war have strong incentives to be creative.
      - somenameforme 4y ago
        The Russian central bank expects a rate of 3-3.5%, the Ministry of Economic Development expects a decline of 2.9%. [1] Your numbers may be dated, as the expected figures keep improving. Some time back they were expecting double digit declines. [1] - https://tradingeconomics.com/russia/gdp-growth-annual https://tradingeconomics.com/russia/gdp-growth-annual
jonnybgood 4y ago
This has nothing to do with USD dominance as many are suggesting. Ghana is running out of USD reserves and has to resort to buying with gold. Nothing suggests they wouldn’t use USD if they had it.
- luciusdomitius 4y ago
  What prevents them exchanging gold for $ like all other gold producers are doing? This is probably what they themselves were doing beforehands?
  - notahacker 4y ago
    This sibling comment has the answer to that: it helps disguise the margin the government makes on gold it compulsory purchases from local miners in local currency https://news.ycombinator.com/item?id=33742853 https://news.ycombinator.com/item?id=33742853 Also helps to look like you're doing something about a debt crisis even if the net effect is minimal or negative...
    - analog31 4y ago
      It shouldn't be hard for the miners to guess that margin, given that the market price of gold can be looked up. Gold is, for all intents and purposes, usable as money, at least between sophisticated parties such as governments. It lacks some of the features of USD, but if Ghana is out of USD, then those features don't matter to them.
      - notahacker 4y ago
        Oh, the mining company management will know what the spot price in dollars is and if the spot price offered in cedis doesn't seem fair. But "we've found a cunning new way to exploit our gold reserves" is a better PR line to the general public than "we're fudging the figures a bit in our favoir* Look at HN's somewhat sophisticated audience heralding it as a power move against the dollar rather than a country scrabbling around for ways to dig itself out of a financial hole caused in part because the dollar holds value much better than their own currency.
Kukumber 4y ago
Let's not forget: Iraq nets handsome profit by dumping dollar for euro (2003) https://www.theguardian.com/business/2003/feb/16/iraq.theeuro https://www.theguardian.com/business/2003/feb/16/iraq.theeur...
bannedbybros 4y ago
boringg 4y ago
Saves them conversion fees for converting gold to USD then to Oil.
RadixDLT 4y ago
good thing bush is not president this time
latchkey 4y ago
> Ghana produces crude oil, but it has relied on imports for refined oil products since its only refinery shut down after an explosion in 2017. Sounds like South Sudan, which Indigo Traveller recently visited... tl'dr: it is a huge mess. https://www.youtube.com/channel/UCXulruMI7BHj3kGyosNa0jA/videos https://www.youtube.com/channel/UCXulruMI7BHj3kGyosNa0jA/vid...
avidphantasm 4y ago
Cue US invasion of Ghana…
- andsoitis 4y ago
  Why do you suppose the US would want to do that?
  - avidphantasm 4y ago
    Why did we invade Libya?
    - shyn3 4y ago
      Libya moved away from the USD and got destroyed. Ghadaffi wanted the African countries to unite and get away from the standard. The American imperialists shut that down fast.
      - Gustomaximus 4y ago
        Note is was USD and potentially more importantly French African Franc under threat, as Europe was very involved in this. And this likely one of several other reasons like ensuing oil/gas flowed to west. And his history of supporting terrorism. Wider arab spring and hope to remove dictatorships.
        mardifoufs 4y ago
        Yes exactly. Europe, specifically france, were spearheading the libyan intervention. The US was a major player too, but mostly to support their european allies. Europe still thinks of africa as its backyard, and France has an extremely neocolonial attitude in the region and openly so. They put the US to shame when it comes to unashamed imperialist interventionism in the politics of their former colonies.
        Gustomaximus 4y ago
Andrew_nenakhov 4y ago
So that's why they received that penalty in recent game vs Portugal. It was a warning.
bell-cot 4y ago
Suggested Thought Experiment: For folks getting really excited here about the US, the US Dollar, etc. - imagine that, for some weird reason, the world's reserve currency was the Tongan paʻanga ( https://en.wikipedia.org/wiki/Tongan_pa%CA%BBanga https://en.wikipedia.org/wiki/Tongan_pa%CA%BBanga ). And that (similar to what the the story notes, for USD) Ghana's reserve of paʻanga was running low, so they were looking to buy oil with gold instead of paʻanga, to (as others have noted) put a smokescreen in front of a big new tax on local gold producers in Ghana. (Gold was ~50% of Ghana's exports in 2019, so there's plenty of income to tax there.) How differently would you view this situation and story, if "US" and "USD" were replaced with (presumably emotionally neutral) "Tonga" and "paʻanga"?
jdmoreira 4y ago
Bypass the petrodollar? Very risky business. What a great way to end up suffering from a three letter agency triggered coup d'etat
- max51 4y ago
  >three letter agency triggered coup d'etat that's if ghana is lucky and they don't try to liberate them from [insert lies] with bombing and boots on the ground.
jeffbee 4y ago
"tehran oil bourse" is one of the older kooky internet theories about how the whole US dollar system is supported by oil. I honestly don't know why these kinds of stories and theories are so appealing to a certain kind of internet guy.
shyn3 4y ago
Dear Ghana. See Libya. R.I.P Ghana.
- trash3 4y ago
  [dead]
- shyn3 4y ago
  Not sure why the reply got downvoted. Ghadafi tried to switch to the gold standard. America isn't backed by gold so it's a threat.
happyjack 4y ago
It is really interesting that the folks running the show in the USA are able to export a lot of the problems with the $ to the rest of the world. Caribbean nations know this first hand, and have given in to the peg. I worked in oil, and now work in an industry where I sell parts worldwide. I'm not a trained economist, but deal with currency and transfer pricing with labor and goods. Couple things: what a lot of people don't know or understand is that pretty much all transactions worldwide are intermediate by USD. Meaning, if a company in Sweden wants to buy something in Cameroon, the banks don't swap currency. They buy dollars with krona and then buy francs with the dollar. This may seem "academic" on paper, but the world essentially has to deal with the dollar and the USA fed and its people with every transaction countries do! They're getting taxes each time they want to trade. Switzerland has purposely devalued its currency because the opposite happened: people were buying Swiss francs as a "safe" investment and not trading or circulating them. I digress ... The only country I see that could actually disrupt the petro dollar is Russia. Russia is doing this on a small scale by forcing Europe to purchase energy in rubbles. Ghana? They may be seeing a three letter agency from the USA very soon ... China? They do too much contract manufacturing for America, and no one wants yen or a currency from a dictatorship. Europe? Too much debt, and they would have to centralize spending (trying to do this with EU commission).
- edgyquant 4y ago
  >They may be seeing a three letter agency from the USA very soon Yeah this shows how little your credibility is. Idiotic meme that was never true
  - happyjack 4y ago
    You realize that the CIA exist to keep international interests in line, and the FBI exists for domestic tranquility?
  - zizee 4y ago
    You think that the USA has never employed it's three letter agencies to protect its interests?
AlbertCory 4y ago
Naive question, but: since they do have crude oil, could they swap that for refined oil products?
lizardactivist 4y ago
The world needs to get off the blood currency that is the U.S Dollar. But I hope the U.S doesn't do to Ghana what they did to Libya, the last country to try something along those lines: forment revolt and overthrow the government, then literally sack the country and leave with billions in gold bars, and say they gave the country freedom and democracy.
spookycrisp 4y ago
how you gonna pay for the gold? ;)
devnulll 4y ago
> Ghana produces crude oil, but it has relied on imports for refined oil products since its only refinery shut down after an explosion in 2017 This seems like the core of the story. Nearly 6 years after that incident, Ghana has been unable to repair the factory and refine it's own oil. My assumption is the tale behind that is tragic and timeless corruption.
- blumomo 4y ago
  Very similar story in Cameroon. Sole refinery broken since 2019 [0]. Now it’s been imported again… [0] https://www.reuters.com/article/cameroon-refinery-idUSL8N23A2L7d https://www.reuters.com/article/cameroon-refinery-idUSL8N23A...
- deleted 4y ago
  [deleted]
funstuff007 4y ago
How does Ghana have access to gold and not have access to USD? Is there some reason why they cannot convert their gold to USD?
Dah00n 4y ago
Is this any different than what Muammar Gaddafi tried to do at one point?
anonymous344 4y ago
oh ghana you silly little..! accidental pepsies coming your way..
thoughtstheseus 4y ago
If you find this article and comments thought provoking I recommend you read Central Banking 101 by Joseph Wang.

179 points by quyleanh 4y ago

This is great news for the people of Ghana .. and I hope it serves as an example for many other nations to come. The era of enslavement to the petrodollar is over.

kaladin_1 4y ago

Interesting the pressure is increasing. More and more countries questioning why they need to base their foreign transaction on the US Dollar. Could this mounting unrest be as a result of the seeming inability of the US Federal bank in checking inflation of the US Dollar. Also, some of these Nations can no longer determine what benefit it is to them is using the US Dollar as their reserve currency and trading currency. Some nations might have alternative properties/currencies that would favour their external trade but yet they are stock with the Dollar and must defer to the US in all that concerns it. I would really love someone more knowledgeable to make a prediction as to where all these could be going. Do you see a country like Saudi going off the USD? Do you think the West-African countries relying on CFA will turn away from that any time soon? Is there a case to be made why these nations should maintain the status quo?

hdhdxkfchsk 4y ago
saudi? no. they are the only elites not tied to petrodollar by force but by financial incentives. all the others probably no as they will see the new gana embargo :( the terms first world and second world were originally coined to means country under petrodollar and countries under ussr. third world was a term that meant free for all to the to two powers.
qikInNdOutReply 4y ago
Could this lead to a chain reactions, were countries abandon the dollar and the dollar looses in value, in return leading to more countries abandon it? A world were the most stabilizing region and its currency become temporary hegemon?
- Isinlor 4y ago
  Ghana GDP is 77.59 billion USD. That's almost 2 Twitters :) . Ghana is not triggering any chain reactions.
  - speedylight 4y ago
    Lucky for them, otherwise the US would’ve sent some freedom and democracy their way.
    - hardlianotion 4y ago
      Seems unlikely.
  - nequo 4y ago
    Ghana's GDP is flow while Twitter's valuation is stock.[1] Given that Twitter's EBITDA was $211mn, it is more accurate to say that Ghana's GDP is 368 Twitters. (Which also sounds crazy nevertheless.) [1] https://en.wikipedia.org/wiki/Stock_and_flow https://en.wikipedia.org/wiki/Stock_and_flow
    - KptMarchewa 4y ago
      I agree that GDP-stock comparison is not good, but why compare to EBITDA rather than revenue or expenses?
      - nequo 4y ago
        I'm not going to say that I have strong views on this right now. But the reason I used EBITDA is that GDP is the total value added of the economy. EBITDA is the total value added of the company.
        Majromax 4y ago
        > EBITDA is the total value added of the company. I don't think that's quite the right interpretation. EBIDTA is the value added of the company net its employees (and I'd quibble over depreciation and taxes), whereas GDP includes the labour share. Imagine we had a single-company country, where every worker was also a customer, all costs were internalized, and capital did not depreciate. The GDP of the country would be equal to the profit of the company plus the wages of the employees. Using the EBITDA equivalence, however, the GDP of the one-company country would be more (possibly far more) than "the one company's earnings."
ur-whale 4y ago
>Do you see a country like Saudi going off the USD? Going off, certainly not (why would they?) But exchanging their oil for other currencies, absolutely. What will be interesting is how long the Sauds will remain in power once they agree to exchange their oil against other currencies. Historically, all regimes that made that decision were or are in the process of being taken down either directly by the US or a combo of their close allies (see: Khadafi, Saddam Hussein, Vlad Putin, etc...)
- pjc50 4y ago
  Russia's sanctions were as a result of their invasion of Ukraine and they'd still be a part of the normal financial system otherwise. It's nothing to do with petrodollars.
  - ur-whale 4y ago
    Apologies, but your reading of the situation is shallow. What do you think led Vlad to invade? The US has been mounting a proxy war against Russia in Ukraine for the past 20 years, one they're ready - barring political upheaval in the US - to fight down to the last European.
    - pjc50 4y ago
      Overconfidence and a need for an external enemy? Satanism? https://www.atlanticcouncil.org/blogs/ukrainealert/nato-nazis-satanists-putin-is-running-out-of-excuses-for-his-imperial-war/ https://www.atlanticcouncil.org/blogs/ukrainealert/nato-nazi... > proxy war against Russia in Ukraine To a certain extent this is true, but the Ukranians have been very keen on it as they've benefited from not being a puppet state run by a corrupt president who built himself a huge palace. And Russia has no right to be "in" Ukraine in the first place.
    - _kbh_ 4y ago
      > What do you think led Vlad to invade? There are vast natural resources in Ukraine which threatens Russias place as the gas station to the world. They also have imperialistic ambitions to try and restore what they see as the glory days of the USSR.
spaceman_2020 4y ago
If you look at the actual numbers, you'll find that USD dominance is still unchallenged. BUT, there is definitely way more chatter about alternative payment options, including from well-placed government sources and central banks in important non-west allied countries. It's now a matter of "when", not "if" when an alternative currency pops up, maybe a BRICS currency.
- UltraViolence 4y ago
  I believe the war in Ukraine has permanently damaged the USD's dominance in the medium to long term. The use of a supposedly neutral financial network (SWIFT) as a sanction weapon will make other nations who aren't on good terms with the U.S. and the West (and not just the "usual suspects" but many nations in Africa and South America too) seeking alternatives. As previously mentioned, Bitcoin is a viable alternative. But there may be others. In any case I see nations ganging up to create an alternative to the SWIFT network, potentially undermining its usefulness.
  - immibis 4y ago
    Why would countries that don't plan to commit genocide need to be bothered by SWIFT cutting off countries that commit genocide? In fact, this is a good thing for countries that don't want to be genocided as it provides an additional incentive against genocide.
    - ilammy 4y ago
      Because who knows what’s on the list of excommunicatable offenses. Today it’s war of aggression, 40 years later on not enough diversity and inclusion could qualify, or the eagle knows what else. Hope for the best prepare for the worst.
    - spaceman_2020 4y ago
      > "No one knows with certainty how many people have been killed and wounded in Iraq since the 2003 United States invasion. However, we know that between 184,382 and 207,156 civilians have died from direct war related violence caused by the U.S" [0] Is it only a genocide if a non-western ally does it? 0: https://watson.brown.edu/costsofwar/costs/human/civilians/iraqi https://watson.brown.edu/costsofwar/costs/human/civilians/ir...
ben_w 4y ago
I'm only at the level of guessing for topics like this, but my guess is that a chain reaction is more likely to see a switch from USD to Renminbi than a switch to gold (or Euros). China because of the potential assuming similar GDP/capita as the current USA. Not soon because I expect as a prerequisite for change being the new winner's GDP to be dominant rather than just joint top 3 in a ranking system that changes their ordering depending on what you value most. Not gold because the justifications given for why we all stopped using the gold standard in the fist place, still seem to apply.
- tcbawo 4y ago
  Do you think GDP is the critical factor for determining a global reserve currency? IMO, respect for property ownership rights, legal/judicial recourse, ubiquity of US banks, and political stability are large contributing factors that few other countries can compete with. China has a pretty checkered past regarding ownership rights for citizens who are critical of its leadership.
  - deleted 4y ago
    [deleted]
  - 988747 4y ago
    Property rights and such are secondary. The primary issue is: who has the power? Right now the answer to that question is "US", but since China is catching up on GDP, and, unlike US, actually manufactures things. If China decides that they want payments for all the goods that they export to be in RMB then there's nothing the rest of the world can do about it, except stop all the imports from China (which would take decades, because they have to learn to manufacture all those goods themselves). Once most of your imports come from China instead of the US it does make sense to use Chinese currency as the reserve currency, since you are going to need a lot of RMB to pay for your imports anyway.
    - matthewdgreen 4y ago
      Saudi Arabia (to pick a major oil exporter) imports about 20% of its goods from China. But it also imports vastly more from regional partners and the US and Europe, not to mention that it depends on the US to secure all of its oil exports to China across thousands of miles of vulnerable ocean routes.
edwnj 4y ago
Its definitely not a lack of confidence in USD or the feds. Relative to pretty much every noteworthy alternative, the feds have handled things a lot better. - EU royally f'd with their stimulus & rates. Mind you, they were in a very precarious position to start with. - China has proven themselves to be a house of cards with zero covid, massive public/corporate debt bubbles and Ji becoming god emperor. - Russia is a glorified gas station with an economy the size of florida. The reason for Ghana's action, Saudi looking to end petro dollar, China+Russia looking to form a block etc: US deep state ducking up big time. The weaponised the dollar.. They've been ramping this up big time during the past few decades but the Ukraine War was a UUUUGE reveal the cards moment. During the last 2 years, Russia was filling up their coffers with high oil prices. The US turned these foreign reserves into worthless numbers on a screen overnight with the press of a few buttons. Now pretty much every country is looking at each other like "oh shit".
rich_sasha 4y ago
I think this take is somewhat over-reacting. I'm pretty sure you'll find that the price they agreed is really in USD, and only the medium of exchange is gold (even if the paperwork or agreement doesn't even reference USD). So really they are paying X USD's worth of gold - with both oil and gold price being fixed in USD somewhere abroad. USD is so incredibly ubiquitous, it won't easily go away. Reserves are a little different, but even then, whenever something bad happens, the dollar strengthens as investors flock to it. When the 2008 crisis happened (and it was US-centric!) US and the dollar were still the safe haven everyone escaped to. Not the Rouble, not the Yuan, not so much EUR or CHF or, from memory, gold. So we'll see people avoid the USD as a medium of exchange, maybe, even if the prices are fixed on USD-denominated prices. But also remember, gold is not a great medium of exchange. Will Ghana ship physical gold around the world (risky and expensive)? Or will they sign a piece of paper saying "gold held by in a safe by someone else and owned by me is now owned by someone else" - in which case there is similar counterparty risk, except perhaps not against the US government. But if you think the US is an evil octopus with long tentacles, surely they could get their hands on this gold. Where will this haven safe from US interference be? If anything, I can more easily believe an alternative economy based on crypto. It's actually happening and working well, for all sorts of shady or illicit activity.
- kibwen 4y ago
  > Or will they sign a piece of paper saying "gold held by in a safe by someone else and owned by me is now owned by someone else" - in which case there is similar counterparty risk, except perhaps not against the US government. The US holds a quarter of all the known gold reserves in the world, and has more gold than the next three countries combined, so there's a decent chance that Ghana's gold is already in the US.
- bobthepanda 4y ago
  EUR is still not a great managed currency. The Euro crisis could, technically, happen again. RUB backing economy is pretty much one major export. JPY makes American debt look chaste in comparison CHF does not want the job, primarily because its use as a basket currency already makes it too strong CNY does not want the job, and their past history of capital controls make America look chaste
edwnj 4y ago
As for what happens next: de-globalisation I predict we'll see blocks forming up again, something like: - West (US+EU) - East (China+Russia) - India (India, Sri Lanka, Himalayan States, South China states) - Middle (Middle East+North Africa) - Latam (Central + South American States) One wild card IMO would be the rise of the Indian sphere of influence. I'll leave some room for India's remarkable ability to snatch defeat form the jaws of victory. If they don't f this up, they have UUUGE tailwinds going for them. Middle east is overrated IMO, its like an oasis with oil instead of water. When the oil money runs out, not gonna be fun any more. Latam is probs the biggest wildcard, even bigger than India. They don't need a lot of things to be right to wildly outperform as a block. Just like the US, they are protected by two oceans so they can choose to not involve themselves in stuff. Africa is highly overrated IMO, the entire continent is cursed in multiple ways. If u compare africa to another post colonial continent like Latam, africa is in a place where they need to get so many things right to just survive, let alone to catch up.
- thisiscorrect 4y ago
  I agree with the general premise of your comment, that this is a small sign of the deglobalization which is _already_ under way. But, what are the UUUGE tailwinds benefiting India? India, even more so than China, seems likely to "get old before it gets rich." Its TFR is already below replacement and falling rapidly.
  - KptMarchewa 4y ago
    China's official TFR figures are massively engineered: https://www.project-syndicate.org/commentary/chinese-population-smaller-than-stated-and-shrinking-fast-by-yi-fuxian-2022-07 https://www.project-syndicate.org/commentary/chinese-populat... India ones are still over replaceability.
    - thisiscorrect 4y ago
      https://www.google.com/search?q=india+total+fertility+rate https://www.google.com/search?q=india+total+fertility+rate tells me India's is 2.18, below the modern replacement TFR rate of 2.3 [1]. [1] https://en.wikipedia.org/wiki/Total_fertility_rate#Replacement_rates https://en.wikipedia.org/wiki/Total_fertility_rate#Replaceme...
sys_64738 4y ago
You ultimately need to pay in some common currency so which common currency do you trust to be secure from inflationary pressures or government interference? Do you trust the Euro to not implode? Do you trust the Chinese Communists with their Yen manipulation? The US dollar is the last currency standing after all others are disqualified.
Spooky23 4y ago
Unlikely. Ghana happens to be a gold producer; they may see this as a better deal for them, and may get some other benefit from a country like China for rattling the cage.
- colechristensen 4y ago
  What’s more likely is that Ghana is using monetary policy as a cover for acquiring locally produced gold at a lower price and selling it abroad for resources to make up for trade deficits.
norswap 4y ago
> Could this mounting unrest be as a result of the seeming inability of the US Federal bank in checking inflation of the US Dollar. This is completely backwards. The problem right now is that the dollar is too strong, meaning expensive wrt other currencies. In this context, inflation of the USD supply, leading to devaluation of the USD would actually help other countries that are suffering from the strong dollar. I'm not saying it would be good for the US, but it certainly would be good for pretty much everybody else.
- danielschonfeld 4y ago
  And there in lies the rub. To keep countries placated we need to create more debt, a metric ton of more debt and hence more broad currency. But doing so at the moment is political suicide as is proven by the left's efforts (deficit spending blah blah etc). Triffin paradox predicted in the 60s at it's full glory. It's also worth noting that at the moment both the Fed and the Treasury (obv) are mandated to be operating with an inward looking view only. Meaning we run a global reserve currency with no 'department' in charge of the global part.
  - kyboren 4y ago
    I don't think this should be downvoted. I believe this is all 100% correct. Maybe because of the "left's deficit spending" part, which is not wrong, but ignores the right's historical deficit spending (e.g. TCJA). Or perhaps the "political suicide" part is misinterpreted: It would be political suicide for a politician to interfere with Fed policy and undercut their blunt force effort to reduce domestic inflation. But any way you slice it, right now the Triffin dilemma is indeed exactly what we're experiencing.
  - jacooper 4y ago
    And this the entire problem. The dollar shouldn't be a global currency.
    - colechristensen 4y ago
      Why? The eurozone can’t hold itself together, China is a house of cards with bad planned economy failures, the uk isn’t worth mentioning any more, and everywhere else either has unstable economies or economies based on volatile or limited lifetime commodities. The dollar is the global reserve currency because the US has centuries of reasonable behavior and military and natural resources that guarantee long term stability. There isn’t a better option unless you’re playing temporary political games or if your macroeconomic situation is so bad you can’t play the game normally.
0x445442 4y ago
I think it’s more an issue of other countries seeing that the U.S. can just confiscate their dollar reserves if the US doesn’t agree with their sovereign actions. Those countries are choosing to divest from the mono world order which is crumbling. For a long but instructive discussion on current economic events check out this interview. https://youtu.be/cD_UcRtljDU https://youtu.be/cD_UcRtljDU
- KptMarchewa 4y ago
  US can confiscate your dollar reserves if you keep those dollars in the US, just as they can confiscate your gold reserves if you keep them in the Fort Knox. >sovereign actions Nice euphemism for genocidal, imperialist war.
  - 0x445442 4y ago
    > Nice euphemism for genocidal, imperialist war. You’re referring to the U.S. right?
    - KptMarchewa 4y ago
      >You’re referring to the U.S. right? You must claim to be very sarcastic! No, I'm refering to only country in XXI century that literally decided to annex other country's territory - two times. All that while losing war, and deciding to unleash hell on civilians they claim to be "their kin". At least we can cheer our hearts looking at fields littered with dead russian soldiers and see that there are countries of the world that won't leave those who need help alone. https://twitter.com/PaulJawin/status/1596033997334872064 https://twitter.com/PaulJawin/status/1596033997334872064
      - cauefcr 4y ago
        So the US policy on Latin America is just fine? Embargoes and CIA financed take-over of many states are all fine?
        4y ago
UltraViolence 4y ago
Saudi Arabia isn't going off the USD. That would seriously undermine their relation with the U.S. and could even have them branded an antagonistic nation. The dominance of the USD is EXTREMELY important to the U.S. and I can assure you that Washington is even willing to wage war over it. But I believe the ball has already started rolling with Bitcoin and Russia's demand for payment in Rubles.
- pirate787 4y ago
  LOL Bitcoin is a joke, its down 65% against the dollar this year
  - luciusdomitius 4y ago
    And it is going to fall more after the rug pull about to happen. Still, even in its worst, it is doing well against TRL, ARP, etc. And those are currencies used by many tens of millions.
  - UltraViolence 4y ago
    FTX's collapse has left its mark, but this will only be temporary. Bitcoin is already demonstrating its usefulness by helping countries evade economic sanctions. There are a truckload of nations who're fed up with the West's financial dominance and are actively seeking alternatives.
    - jen20 4y ago
      > FTX's collapse has left its mark, but this will only be temporary Bitcoin was down well in advance of the FTX collapse. The reason it is down is because it's a Ponzi scheme, and an unconscionable waste of resources so that cryptobros can LARP at being a libertarian.
      - andirk 4y ago
        > The reason it is down is because it's a Ponzi scheme Is the rest of the stonks also a ponzi scheme? Because if you didn't notice, those are also very down.
Zigurd 4y ago
The reason US$ denominate most trade is that without what is broadly referred to as "The West" global trade would not move. Trade would not be protected by a web of alliances among developed nations. If that goes away, ships would not be insured. Uninsured ships would be lost to pirates and rogue nations. Prices would jump sharply. Supply chains would have to go back to warehousing enough supply to withstand disruptions. Warehoused parts would become stranded assets when products change. Growth would be choked off. This is not an excuse for imperialism and crony capitalism that exploits developing nations. Especially in how multinational oil companies corrupt entire nations. Working toward the end of fossil fuels will hasten them losing their power. But the lesson of this year is that those dull bureaucratic things like NATO and the EU are what keeps fascistic autocrats contained and gives aggressor nations the thrashing they deserve. Even the Tories are realizing they got played by Putin's plan to divide the nations that could hold him back.
luciusdomitius 4y ago
The petrodollar is a really weird thing. According to its critics, it is a global monopoly on violence and pure extortion, to its implementors - merely a conspiracy theory. Please, before you clinge to the conspiracy theory label, check how many great people such as de Gaulle have whined against it and what is Privilege l'exorbitant in French political science. In reality, global trade is not in USD purely because it is backed by carriers and they can invade anyone, but because this navy also protects shipping lanes and offers international rule of law. Remember when the US took a break in the gulf of Aden and it took us Europeans (+Russia and token help from US!!) years to agree and secure it. So, things are not black and white. Anyway, this system is collapsing from within and will be replacing. The success of the S.Arabia pivot is going to merely decide if it happens in 10 or 20 years time. Btw does anyone know how did the MBS-Xi meating go?
- imtringued 4y ago
  The exorbitant privilege thing is kind of strange when countries voluntarily demand more dollars or even borrow dollars. The "privilege" is only exorbitant if you are the only survivor of a world war.
- eunos 4y ago
  > Petrodollar Is rather remnant of the past. FYI I think half of world forex reserve is held in the 5 entities in East Asia (CN, JP,KR,TW,HK). Whatever dollar the Petrostate get (sans Russia) they recycled it to various goods and services mostly sourced from East Asia. > Btw does anyone know how did the MBS-Xi meating go? Will commence in December, previously rumored didn't happen
jonnybgood 4y ago
Ghana isn’t questioning anything. They’re just running out of USD.
SuoDuanDao 4y ago
Somewhere in my comment history I made the prediction "It will be possible to buy large amounts of oil without USD by 2024" - so I think I've got a decent track record on this subject. I'm much less confident in these predictions than that one, but I'll predict Saudi Arabia won't go off the USD because they depend on US military support in a pretty warlike part of the world and the CFA will be replaced by 2027 as currently planned without any major interference from the European powers. As for a case for maintaining the status quo - The example made of Ghaddafi comes to mind.
- snovv_crash 4y ago
  CFA? What are you referring to here, not the financial certification institution I'm guessing?
  - SuoDuanDao 4y ago
    had to google it too: https://en.wikipedia.org/wiki/West_African_CFA_franc https://en.wikipedia.org/wiki/West_African_CFA_franc
- nivenkos 4y ago
  The US is exploiting it to the maximum with the Inflation Reduction Act, etc. The rest of the world will react eventually, the Zelenksy-Putin puppet show will only distract them for so long.
dehrmann 4y ago
> More and more countries questioning why they need to base their foreign transaction on the US Dollar. For spot transactions, it doesn't really matter beyond giving the buyer and seller a common language to negotiate in. For contracts sometime in the future, if you're Argentina, no one wants to bet on where the Peso will be in 6 months.
deleted 4y ago
[deleted]

GoOnThenDoTell 4y ago

Im curious about the mechanics of how this helps, could they not sell the gold for dollars to buy the oil?

4pkjai 4y ago
I think the reason they want to avoid the US dollar is so that they do not need to obey US sanctions. From what I understand, if you send US dollars around the world, they need to go through a US bank. All US banks must obey US government sanctions.
- pjc50 4y ago
  Ghana are not subject to sanctions?
  - djbebs 4y ago
    Right now. Can you guarantee that will always be the case we'll into the future?
  - elzbardico 4y ago
    They may want to buy things like fertilizers or wheat from a sanctioned entity, Russia coming to mind.
- fmajid 4y ago
  They don't want to avoid the dollar, far from it, they want to keep the few dollars they still have and pay with something else instead. Now, if I were the Chinese with an overabundance of dollars (or worse, US Treasury bonds), I'd be trying to convert them into something else ASAP. They tried to buy companies, agricultural land and other things with intrinsic value, but were blocked by CFIUS and the EU is setting up its equivalent.
- fuzzfactor 4y ago
  Right now dollars are skyrocketing in value compared to their own currency. For them dollars earn much more being held rather than being invested in most other things within reach. They can dig up more gold from their own mines which they're always doing anyway regardless of its prevailing price.

ur-whale 4y ago

The hegemony of the dollar as a reserve currency is finally coming to an end, and while many will disagree with my opinion, I believe it's a very good thing for the world. The US has been allowed by the rest of the world to use the dollar as a weapon since the end of WWII, specifically using it to impose unilateral economic sanctions on anyone they don't like, thereby flouting or downright ignoring other countries sovereignty in the process. The have also used the privileged status of the dollar to gain systematic, unfair and generally undeserved economic advantage in international markets. They have also used this advantage to create a completely unsustainable amount of debt which the US will never be able to repay now that the dollar is becoming just another currency. Picasso was famous for writing checks, knowing fully well that they would never get cashed out because, bearing his signature, there was an intrinsic demand for them and the thing would be kept as is by the owner. US dollars are very similar to Picasso's checks in the sense that foreign country all keep large amounts of US currency reserve and debt instrument, but they never "cash them out" (exchange them for US-based hard assets such as land and businesses). The world has allowed this to happen for near 70-ish years because the for the longest time, the US was perceived by a large part of the world as a force for good. That ship has sailed though, and in 2022 it's getting pretty hard to find folks outside of the US that view it as a force for good anymore (or just don't downright hate their guts with a passion). To be a useful tool, a currency should be, among other things: a) managed in a sane manner (as in: the amount issued should be on a fixed schedule, as per Milton Friedman) b) not used to tilt the playing field c) essentially politically neutral, and in particular managed by an entity not in any way controllable by the government. The US dollar doesn't meet any of these criteria, and the chicken are now coming home to roost and the dollar will slowly lose it's privileged status among world currencies, slowly being replaced by a bunch of other. Good riddance.

dragonelite 4y ago
Wondering what will replace it, maybe the Brics coin a basket of currencies and commodities. A bit like Keynes Bancor concept if i'm not mistaken time will tell what sort of currencies the Russians and Chinese will introduce for BRICS, SCO and BRI nations.
- 4y ago

llampx 4y ago

Regime change in 3... 2...

jerkstate 4y ago
Don't necessarily even need to plan for a new regime. Libya tried this and now they are a failed state with open air slave markets.
- luciusdomitius 4y ago
  https://www.theguardian.com/business/2003/feb/16/iraq.theeuro https://www.theguardian.com/business/2003/feb/16/iraq.theeur... :D
rightbyte 4y ago
Ye ... It would not surprise me even a little bit.

pwm 4y ago

I know a lot of people dislike bitcoin here but I'm wondering (with the huge assumption that its value stabilises over time) would it not actually be a better solution? Not just from an obvious logistical but also from an environmental perspective? I'd imagine gold mining to be much more destructive (both to nature and to human life).

fendy3002 4y ago
I wonder if they can use it? As a noob I see that crypto value is very volatile and don't have intrinsic value, unlike gold that somehow is accepted universally as valuable.
- tremarley 4y ago
  It has intrinsic value as it requires work to mine it. It is impossible to generate more whenever you want. You can spend bitcoin in every country, it's valuable everywhere.
  - andsoitis 4y ago
    > It has intrinsic value as it requires work to mine it. All work isn’t equally valuable. Some work is worth nothing. > It is impossible to generate more whenever you want. Value and wealth do not only arise from scarcity.
senectus1 4y ago
The crypto market (including btc) is incredibly fragile. It's also got way too shallow a gene pool (meaning too few hold too much). Until it gets spread further and wider it can't be relied on for much.
Ekaros 4y ago
And why give all that wealth away to current holders? Nothing actually make bitcoin inherently valuable on nation-state level. Gold is fine for now and maybe in future some new agreed upon commodity-current basket currency.
4y ago

peter-m80 4y ago

Honest question: Can someone explain me why using gold instead of dollars to buy oil isn't the same as sell gold for dollars and use those dollars to buy oil?

Ekaros 4y ago
For two parties to transact in dollars they need either to physically hold large amounts of dollars. Or have access to some shared ledger that is accounting system where transactions can happen. Say A, B, C account. A sells gold and get dollars from account B to account A. And now they can buy oil from owner of account C. But who owns and runs these accounts or the transactions between them? One option is SWIFT system. Which Russia got excluded in some capacity from. As such it is clear that system cannot be trusted. Value of dollars there are very unlikely to be good for long term. And same applies to any accounts in banks in western influence sphere. Thus directly transacting is better option in long run. For any country that wants to keep their economy stable.
- lvl102 4y ago
  - Sargos 4y ago
    Putting your entire economy at risk of being turned off advisory due to unknown future political disputes is a risk to the sovereignty of nearly every country in the world. Many countries are now looking for alternatives after the neutrality of swift/the dollar was eliminated.
  - Ekaros 4y ago
    No. I'm not thanks for ad-hominem though.
- giaour 4y ago
  > One option is SWIFT system. Which Russia got excluded in some capacity from. As such it is clear that system cannot be trusted. That is quite a leap. Russia was also excluded from the NY stock exchange due to the ongoing sanctions; does that mean we can no longer trust stocks bought and sold there?

kumarvvr 4y ago

Realistically, how much gold does Ghana have to actually sustain this long term? Would they be trading in Gold for other exports?

missedthecue 4y ago
The are the 6th largest gold producer globally

freddealmeida 4y ago

It won't happen.

tiahura 4y ago

To all opining about the ongoing demise of the dollar, please take a look at a 10 year DXY chart. Executive summary: It’s stronger than ever.

hmate9 4y ago
1) it was much stronger in 1985 2) just because it’s strong now doesn’t mean it cannot ever fail. Ray Dalio’s new book might interest you as he breaks down past world powers and how their currencies (which were global reserve currencies at the time) collapsed
Rexxar 4y ago
Higher price and higher usage are not the same thing, a less used dollar would not necessarily have lower value. The evolution of foreign exchange market turnover would be a better indicator to look at : https://en.wikipedia.org/wiki/Currency_pair#Base_currency https://en.wikipedia.org/wiki/Currency_pair#Base_currency // https://www.bis.org/statistics/rpfx22_fx.pdf https://www.bis.org/statistics/rpfx22_fx.pdf (it's also increasing in the 3 last years)

simple-thoughts 4y ago

For people saying that this is a sign of the dollar dominance ending consider this. Gold is valued in dollars. Oil is valued in dollars. Any gold for oil exchange will be decided by the going dollar rate of each. Counter parties and middlemen assisting this trade will be hedging their positions with dollar settled derivatives traded on deep and liquid dollar markets.

hmate9 4y ago
Gold isn’t valued in dollars. You can sell gold for any currency. Oil is primarily transacted with dollars because it’s the worlds reserve currency. But if that were to change to whatever, you can still sell your oil and gold for whatever the new dominant currency is. Meanwhile your dollar is (presumably in this case) worth way less in terms of buying power than when you first bought it.
- simple-thoughts 4y ago
  You can always barter anything for anything else, but how do you decide the rate to barter at? It’s determined by the rate for the most liquid markets for the two sides, because the price of an asset in the most liquid market is the price all other markets will follow. There just aren’t gold based markets that are even remotely comparable to usd ones, so the ratio of gold to oil is set by their respective rates in usd. To see an actual switch from usd to gold for valuing oil, you’d need to see the market liquidity migrate from usd/oil pairs to gold/oil pairs. Ghana making a political statement isn’t that.
themihai 4y ago
>> Gold is valued in dollars. Oil is valued in dollars. If a long term contract is signed it protects you from dollar's inflation/volatility as the contract used gold as currency. I think this is important as tomorrow Fed's decision is no longer that important for your energy costs. The more important part is that if enough contracts are signed in gold(highly unlikely given U.S's oil exports) then the dollar is no longer relevant to the oil price.
- 4y ago

deleted 4y ago

[deleted]

fernandohur 4y ago

Small reminder: ghana's consumption of oil is 0.1% of the worlds total oil consumption (Source: https://www.worldometers.info/oil/ghana-oil/ https://www.worldometers.info/oil/ghana-oil/), essentially a rounding error. Take this into account before making any statements about the ending dominance of the dollar.

SQueeeeeL 4y ago
Ahh yes, small changes never preclude larger shifts in large geopolitical entities. But also if anyone tells you they know the future, they're probably trying to sell you something. If I were in charge of Ghana's finances, I'd be pretty cautious of standing in front of any windows for the next few years.
- notahacker 4y ago
  Small changes preclude absolutely nothing happening far more often, and the imminent demise of the petrodollar has been forecast for fifty years involving some much more seismic events than a country with gold mines and a severe dollar reserve shortage and debt problem proposing that gold might solve their problem. At least the half dozen "gold dinar" projects had a bit of global ambition and a theoretical rationale for the religion of much of the world's oil exporting economies to participate.
- imtringued 4y ago
  Brexit was supposed to be the end of the EU.
  - deleted 4y ago
    [deleted]
  - InCityDreams 4y ago
    >Brexit was supposed to be the end of the EU. I always considered Brexit to be the end of the UK's involvement in the EU? Your source(s)?

UltraViolence 4y ago

We'll see the dominance of the USD erode in the next three decades is my prediction. Look at how successful Putin was in demanding payment for Russian oil in Rubles. It has propped up the Ruble enormously and its predicted collapse hasn't occurred. In fact it has rallied. I assure you that other nations have taken note and will take similar steps in the future. Other commodities may well be priced in local currencies of the producing nations. Think gold, diamond, gas, oil, timber, wheat.

oj2828 4y ago
Russia had to raise interest rates to 20% to achieve the recent appreciation. Russia is giving up economic growth for the foreseeable future to prop up its currency. I doubt many countries are eyeing a similar move
- somenameforme 4y ago
  They raised them to 20% for one month in the face of a nuclear economic strike. Their rates are down to 7.5% which are close to nominal for them. Remaining effects are a 3% GDP decline and a 12% inflation rate trending downward from a peak of 18% following the attack. The overall impact seems to be fading to zero relatively quickly, excepting a much stronger ruble. Future growth numbers will be interesting to follow. Much could shift radically one way or the other depending on oil prices, but the US seems to have a declining level of influence with OPEC+.
  - The_Colonel 4y ago
    > Remaining effects are a 3% GDP decline It's 3.9% (which rounds up to 4%, not to 3%) this year and 5.6% next year. This forecast is based on figures kindly provided by Russian authorities, which in times of war have strong incentives to be creative.
    - somenameforme 4y ago
      The Russian central bank expects a rate of 3-3.5%, the Ministry of Economic Development expects a decline of 2.9%. [1] Your numbers may be dated, as the expected figures keep improving. Some time back they were expecting double digit declines. [1] - https://tradingeconomics.com/russia/gdp-growth-annual https://tradingeconomics.com/russia/gdp-growth-annual

jonnybgood 4y ago

This has nothing to do with USD dominance as many are suggesting. Ghana is running out of USD reserves and has to resort to buying with gold. Nothing suggests they wouldn’t use USD if they had it.

luciusdomitius 4y ago
What prevents them exchanging gold for $ like all other gold producers are doing? This is probably what they themselves were doing beforehands?
- notahacker 4y ago
  This sibling comment has the answer to that: it helps disguise the margin the government makes on gold it compulsory purchases from local miners in local currency https://news.ycombinator.com/item?id=33742853 https://news.ycombinator.com/item?id=33742853 Also helps to look like you're doing something about a debt crisis even if the net effect is minimal or negative...
  - analog31 4y ago
    It shouldn't be hard for the miners to guess that margin, given that the market price of gold can be looked up. Gold is, for all intents and purposes, usable as money, at least between sophisticated parties such as governments. It lacks some of the features of USD, but if Ghana is out of USD, then those features don't matter to them.
    - notahacker 4y ago
      Oh, the mining company management will know what the spot price in dollars is and if the spot price offered in cedis doesn't seem fair. But "we've found a cunning new way to exploit our gold reserves" is a better PR line to the general public than "we're fudging the figures a bit in our favoir* Look at HN's somewhat sophisticated audience heralding it as a power move against the dollar rather than a country scrabbling around for ways to dig itself out of a financial hole caused in part because the dollar holds value much better than their own currency.

Kukumber 4y ago

Let's not forget: Iraq nets handsome profit by dumping dollar for euro (2003) https://www.theguardian.com/business/2003/feb/16/iraq.theeuro https://www.theguardian.com/business/2003/feb/16/iraq.theeur...

bannedbybros 4y ago

boringg 4y ago

Saves them conversion fees for converting gold to USD then to Oil.

RadixDLT 4y ago

good thing bush is not president this time

latchkey 4y ago

> Ghana produces crude oil, but it has relied on imports for refined oil products since its only refinery shut down after an explosion in 2017. Sounds like South Sudan, which Indigo Traveller recently visited... tl'dr: it is a huge mess. https://www.youtube.com/channel/UCXulruMI7BHj3kGyosNa0jA/videos https://www.youtube.com/channel/UCXulruMI7BHj3kGyosNa0jA/vid...

avidphantasm 4y ago

Cue US invasion of Ghana…

andsoitis 4y ago
Why do you suppose the US would want to do that?
- avidphantasm 4y ago
  Why did we invade Libya?
  - shyn3 4y ago
    Libya moved away from the USD and got destroyed. Ghadaffi wanted the African countries to unite and get away from the standard. The American imperialists shut that down fast.
    - Gustomaximus 4y ago
      Note is was USD and potentially more importantly French African Franc under threat, as Europe was very involved in this. And this likely one of several other reasons like ensuing oil/gas flowed to west. And his history of supporting terrorism. Wider arab spring and hope to remove dictatorships.
      - mardifoufs 4y ago
        Yes exactly. Europe, specifically france, were spearheading the libyan intervention. The US was a major player too, but mostly to support their european allies. Europe still thinks of africa as its backyard, and France has an extremely neocolonial attitude in the region and openly so. They put the US to shame when it comes to unashamed imperialist interventionism in the politics of their former colonies.
        Gustomaximus 4y ago

Andrew_nenakhov 4y ago

So that's why they received that penalty in recent game vs Portugal. It was a warning.

bell-cot 4y ago

Suggested Thought Experiment: For folks getting really excited here about the US, the US Dollar, etc. - imagine that, for some weird reason, the world's reserve currency was the Tongan paʻanga ( https://en.wikipedia.org/wiki/Tongan_pa%CA%BBanga https://en.wikipedia.org/wiki/Tongan_pa%CA%BBanga ). And that (similar to what the the story notes, for USD) Ghana's reserve of paʻanga was running low, so they were looking to buy oil with gold instead of paʻanga, to (as others have noted) put a smokescreen in front of a big new tax on local gold producers in Ghana. (Gold was ~50% of Ghana's exports in 2019, so there's plenty of income to tax there.) How differently would you view this situation and story, if "US" and "USD" were replaced with (presumably emotionally neutral) "Tonga" and "paʻanga"?

jdmoreira 4y ago

Bypass the petrodollar? Very risky business. What a great way to end up suffering from a three letter agency triggered coup d'etat

max51 4y ago
>three letter agency triggered coup d'etat that's if ghana is lucky and they don't try to liberate them from [insert lies] with bombing and boots on the ground.

jeffbee 4y ago

"tehran oil bourse" is one of the older kooky internet theories about how the whole US dollar system is supported by oil. I honestly don't know why these kinds of stories and theories are so appealing to a certain kind of internet guy.

shyn3 4y ago

Dear Ghana. See Libya. R.I.P Ghana.

trash3 4y ago
[dead]
shyn3 4y ago
Not sure why the reply got downvoted. Ghadafi tried to switch to the gold standard. America isn't backed by gold so it's a threat.

happyjack 4y ago

It is really interesting that the folks running the show in the USA are able to export a lot of the problems with the $ to the rest of the world. Caribbean nations know this first hand, and have given in to the peg. I worked in oil, and now work in an industry where I sell parts worldwide. I'm not a trained economist, but deal with currency and transfer pricing with labor and goods. Couple things: what a lot of people don't know or understand is that pretty much all transactions worldwide are intermediate by USD. Meaning, if a company in Sweden wants to buy something in Cameroon, the banks don't swap currency. They buy dollars with krona and then buy francs with the dollar. This may seem "academic" on paper, but the world essentially has to deal with the dollar and the USA fed and its people with every transaction countries do! They're getting taxes each time they want to trade. Switzerland has purposely devalued its currency because the opposite happened: people were buying Swiss francs as a "safe" investment and not trading or circulating them. I digress ... The only country I see that could actually disrupt the petro dollar is Russia. Russia is doing this on a small scale by forcing Europe to purchase energy in rubbles. Ghana? They may be seeing a three letter agency from the USA very soon ... China? They do too much contract manufacturing for America, and no one wants yen or a currency from a dictatorship. Europe? Too much debt, and they would have to centralize spending (trying to do this with EU commission).

edgyquant 4y ago
>They may be seeing a three letter agency from the USA very soon Yeah this shows how little your credibility is. Idiotic meme that was never true
- happyjack 4y ago
  You realize that the CIA exist to keep international interests in line, and the FBI exists for domestic tranquility?
- zizee 4y ago
  You think that the USA has never employed it's three letter agencies to protect its interests?

AlbertCory 4y ago

Naive question, but: since they do have crude oil, could they swap that for refined oil products?

lizardactivist 4y ago

The world needs to get off the blood currency that is the U.S Dollar. But I hope the U.S doesn't do to Ghana what they did to Libya, the last country to try something along those lines: forment revolt and overthrow the government, then literally sack the country and leave with billions in gold bars, and say they gave the country freedom and democracy.

spookycrisp 4y ago

how you gonna pay for the gold? ;)

devnulll 4y ago

> Ghana produces crude oil, but it has relied on imports for refined oil products since its only refinery shut down after an explosion in 2017 This seems like the core of the story. Nearly 6 years after that incident, Ghana has been unable to repair the factory and refine it's own oil. My assumption is the tale behind that is tragic and timeless corruption.

blumomo 4y ago
Very similar story in Cameroon. Sole refinery broken since 2019 [0]. Now it’s been imported again… [0] https://www.reuters.com/article/cameroon-refinery-idUSL8N23A2L7d https://www.reuters.com/article/cameroon-refinery-idUSL8N23A...
deleted 4y ago
[deleted]

funstuff007 4y ago

How does Ghana have access to gold and not have access to USD? Is there some reason why they cannot convert their gold to USD?

Dah00n 4y ago

Is this any different than what Muammar Gaddafi tried to do at one point?

anonymous344 4y ago

oh ghana you silly little..! accidental pepsies coming your way..

thoughtstheseus 4y ago

If you find this article and comments thought provoking I recommend you read Central Banking 101 by Joseph Wang.