Selling Oil For Euros Instead Of Dollars

[Barnabas]

To the people who understand economics, should I change my dollars for Gold or Euros?

[DanS]

Originally posted by VetLegion
A weaker dollar makes imports to USA more expensive and encourages domestic production and export. Which is just what USA needs, no?

I would put it another way. The US needs foreign economies to grow as quickly as the US economy so that foreigners can buy American goods and services in equal measure to what the US buys from foreigners.

Overall, I think buying oil in Euros rather than greenbacks has a limited impact. The magnitude of the oil trade is big, but not big enough to impact our foreign relations or our economy much as a matter of currency.

[Whoha]

Originally posted by Brachy-Pride
To the people who understand economics, should I change my dollars for Gold or Euros?

gold is the safe bet.

[Saras]

Iran probably never heard of Euro-Dollar swaps

"OOOO, we're gonna sell you oil for EUROS!!! BOOO!!!1! Ph33r!!!1

Bloody stupid fundie ****ers.

[Dinner]

Originally posted by Brachy-Pride
To the people who understand economics, should I change my dollars for Gold or Euros?

Depends on what you want to do. The dollar is supposed to continue declining at a slow rate for several years because 1) the trade deficit and 2) we have a worthless government which won't balance the budget or even pretend to be interested in balancing the budget. If you have your money invested in dollar dominated stocks which are growing at a faster rate then the dollar is declining (which is easy to do since the dollar is declining so slowly) then you do well. If you switch to Euro dominated assets then you get a slight boost as the Euro goes up in value but the EU's economy isn't growing any where near as fast as the US's so it still might not be a good idea. If you just have money ideally sitting in a bank then switching makes sense but leaving money to ideal is not very smart and instead most people will invest it in stocks, bonds, or other investments in which case it really depends upon which stocks, bonds, or assets you are invested in.

[Dinner]

Originally posted by Whoha


gold is the safe bet.

Tell that to the people who lost the shirts off of their backs on gold in the 1980's.

[Colonâ„¢]

Re: Selling Oil For Euros Instead Of Dollars

Originally posted by VetLegion
I'm looking for an economist's perspective about this.

Some have said that Iraq was invaded because it was going to sell its oil for euros instead of dollars. Now some are saying that Iran is being threatened for exactly the same thing. It plans to open an oil market in euros on 20. March.

Could someone explain to me in layman's terms what advantage exactly does USA have when, say, EU and Japan buy oil from Iran in dollars?

Why should USA care?

I can't figure out whether this is another crazy conspiracy theory or whether it has some substance in it.

It provides US traders with less price risks. Europeans for instance not only have to consider the fluctuations of the oil price itself but also currency fluctuations.

[Fake Boris]

I think plenty of different but valid reasons have been given so far to demonstrate what advantages there are for America in its currency being the reserve one.

As usual, DanS and his pink glasses are waiting for the good times to roll. It's time to smell the coffee dude. You don't spend hundreds of billions on an invasion if you don't have a hell of a good reason for it.

[Dauphin]

Originally posted by VetLegion


Of course, in an inflationary situation someone who holds cash gets ripped off. But it's impossible to separate the domestic and the international supply of dollars, no? If holders of dollars outside US suffer from inflation, so do holders of dollars in the USA. You can't rip off foreigners without ripping off all. Correct?

If the dollar were not the international currency then the US would still suffer domestic inflation, but also would not be getting foreign goods and services in the short term repaid by exporting fewer self-produced goods and services in the long term.

[Colonâ„¢]

It all boils down to removing currency risks really.

[Fake Boris]

No. It's one of the reasons but there are others.

[DAVOUT]

Regarding the international role of the US$, we have to consider two aspects:
- the US$, as a reserve currency, enjoys a dominant position which can be qualified as unfair, but for a long time no other currency was in a position to do that, and now this responsibility is partially shared with other currencies, mainly yen and euro; as long as central banks need reserves, although possibly unfair, the US$ advantage was, is and will be in the foreseeable future usefull to all.
- the US$ is also used on large international markets, like oil, for the simple reason that it is easier that quotes are made in one currency commonly knowed in the whole world; therefore, the related transactions are billed in the currency used on the market; these invoices are paid in US$ bought on the currencies markets(*). If another currency built a presence and acceptance as large as the US$, bills in that currency would be as convenient that billing in US$ is today.
(*) This does not result in a significant advantage, since this market is supplied by the companies emitting the invoices (petro-dollars).

[VetLegion]

Which reason is the most important?

[DAVOUT]

Definitely the first one.

[Whoha]

Originally posted by Oerdin


Tell that to the people who lost the shirts off of their backs on gold in the 1980's.

Yes of course there is the exceedingly rare occurence of having a Fed chair and President that want to reign in inflation, but thats not too likely, and he'll get plenty of warning in any event.