3 ms·

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
At some point in their history, the US unilaterally decided that any transaction occuring in dollars in any parts of the world was subject to US law. In other words, they suddenly had granted themselves legitimacy to enforce US law anywhere on the planet as long as a single dollar changed hands. As the US perceives itself as an empire, it makes complete sense from their POV. But mayyybeeee, if you're in Ghana, you still cherish delusions of being a sovereign nation ...
pjc50 4y ago
This. People seem very exercised about using the dollar specifically to buy oil, but .. currencies are fungible? You can trade them on international markets? Also, where does the gold come from? Is it just their central bank reserve? No, it seems that Ghana is experiencing the classic forex problem of not being able to export enough valuable production in order to afford its imports, and it's very hard to reduce imports of fuel without drastic drops in either lifestyle or production capacity. And if you can't afford fuel to produce exports, then you have a death spiral.
- squaresmile 4y ago
  Yeah, it's pretty disappointing that most comments focus on the ideological aspect and celebrate the move while the picture is pretty bleak for Ghana. Unfortunately, this story is not unique to Ghana and if the situation does not improve, I fear for how next year will look.
- ksidudwbw 4y ago
  Can always bring in investors
3pt14159 4y ago
All the mechanics in the world won't help you if the fundamentals are broken. At some point, when push comes to shove, someone has to take delivery of something. This comes down to a matter of efficiency and faith. Who do you have more faith in? A random bank claiming to having a certain amount of gold on deposit? Your own central bank taking in tons of gold for delivery of a good? This is silliness. If the USD is inflating too much (or if you perceive American sanctions as too onerous) then use a different currency like the Swiss Franc or the Euro. None of this really matters. What matters is international settlements, agreements, and force. If you're on the wrong side of the WTO your economy is cooked anyway. Besides, if Ghana were some stalwart of anti-corruption then this may mean something, but it isn't. It's middle of the pack. Well behind Canada, Europe, Japan, and The United States; all countries or blocks that are perfectly fine selling and buying in USD.

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

At some point in their history, the US unilaterally decided that any transaction occuring in dollars in any parts of the world was subject to US law. In other words, they suddenly had granted themselves legitimacy to enforce US law anywhere on the planet as long as a single dollar changed hands. As the US perceives itself as an empire, it makes complete sense from their POV. But mayyybeeee, if you're in Ghana, you still cherish delusions of being a sovereign nation ...

pjc50 4y ago

This. People seem very exercised about using the dollar specifically to buy oil, but .. currencies are fungible? You can trade them on international markets? Also, where does the gold come from? Is it just their central bank reserve? No, it seems that Ghana is experiencing the classic forex problem of not being able to export enough valuable production in order to afford its imports, and it's very hard to reduce imports of fuel without drastic drops in either lifestyle or production capacity. And if you can't afford fuel to produce exports, then you have a death spiral.

squaresmile 4y ago
Yeah, it's pretty disappointing that most comments focus on the ideological aspect and celebrate the move while the picture is pretty bleak for Ghana. Unfortunately, this story is not unique to Ghana and if the situation does not improve, I fear for how next year will look.
ksidudwbw 4y ago
Can always bring in investors

3pt14159 4y ago

All the mechanics in the world won't help you if the fundamentals are broken. At some point, when push comes to shove, someone has to take delivery of something. This comes down to a matter of efficiency and faith. Who do you have more faith in? A random bank claiming to having a certain amount of gold on deposit? Your own central bank taking in tons of gold for delivery of a good? This is silliness. If the USD is inflating too much (or if you perceive American sanctions as too onerous) then use a different currency like the Swiss Franc or the Euro. None of this really matters. What matters is international settlements, agreements, and force. If you're on the wrong side of the WTO your economy is cooked anyway. Besides, if Ghana were some stalwart of anti-corruption then this may mean something, but it isn't. It's middle of the pack. Well behind Canada, Europe, Japan, and The United States; all countries or blocks that are perfectly fine selling and buying in USD.