AceChilla
Goedheiligman
There are many reasons why the US has invaded Iraq, the possible posesions of WMD being one of them. But there is an aspect of the Iraq war that has not been widely discussed but still could have been an important factor why the US was so eager to decide it was time for an invasion. and that reason was the threat it would be for the US economy if the Dollar would be exchanged for the Euro in the world's oil market.
The hegemony of the US economy is largely founded on the fact that the Dollar is the world's most important currency, 80% of all valuta transactions are done in Dollar's and approximatly 2/3 of the world's exports are in Dollar's. On top of that all loans given by the IMF are in Dollar's.
Because there are so many dollar's circulating outside the United States the US is able to have an enormous trade deficit. Last year the import into the United states was 48% than the US export. No other country can maintain such a huge trade deficit for such a long time. This in fact makes sure the US gets enormous interest free lones from the rest of the world and they don't have to do anything for it.
The hegemony of the Dollar makes sure the US is making dollars and the world is making product's to make sure they have enough dollars in reserve to pay foreign debts and secure there own Valuta.
'Per definition Dollar reserves must be invested in the US creating Capital surplus in the US economy, this surplus finances the US trade deficit. On top of that you could state that every possesion in Dollar's is in fact an American owned property. When oil by us intervention is payed in Dollar's and the Dollar is the only world currency the US infact's get their oil for free. And the more Dollar the US produce the more American possesion will increase in value. A strong dollar policy gives the US a double profit" (Asian Times)
Euro
Since recently their has been a new kid on the block in the form of the Euro. And their indications that in the Euro is contesting with the Dollar for the price of being the world's leading currency. Of course the Euro zone is an enormous economicaly powerfull block. One of the main goals when introducing the Euro was to make the Euro the world's most important reserve currency, this will let Europe enjoy a free increase in capital, like the Dollar has now.
This will be desatrous for the United States, not only will it mean they will lose their free investment's and products, but countries will also be forced to exchange (partially) their Dollar reserves for Euro reserves. This will let the Dollar fall in value rapidly. The American import will become more expensive. When countries start chaging their Dollar posessions for Euro possesions this will also have an impact on the US stock market. The FED will not be able to print more dollar's to cope with the situation, while their wont be foreing buyers for those dollars. It will only increase the inflation and thus the crises.
Now what's the main obstacle to making the Euro the world's leading currency? The answer is oil. Oil is the most important good that's being traded world wide. It's also a must have for all modern economies, If you don't have oil, you have to buy it and to by it you need Dollars.
These oil Dollars are called petrodollars and the US print hunderds of billions of these which are used bu countries to buy oil. These pertodollars come back to the US in the form of bonds stocks or possesions in dollars. As long as countries need dollars to buy oil Amercian economic hegemony is ensured.
Cóilín Nunan: This situation means the US controls the world trade in an effectibe manner: You can only by oil if you have dollars and the only one with the right to make Dollars is the United States.
But what is the case. Many oil producing nations are thinking about getting rid of the Dollar for their oil exchange's and stepping over to the Euro. The Euro zone is a bigger importer of oil then the US, and the political situation in the middle east is such that getting rid of the dollar is very popular. And change from dollar to euro will have huge consequences for the US economy. And every country that makes a suggestion which could lead to that to happen can be sure America won't like it.
And what is the case? Iraq was the first oil producing country that changed to Euro's in 2000. Because of the fast rise in value of the Euro this was highly profitable, and other countries started to tink about it as well. Iran was the second country that stated it is thinking about doing it.
What's extra alarming for the US is that the middle east is not the only part of the world stepping over. China a country that's on second place when it comes to money reserves has stated it will exchange their reserves from Dollar's to Euro's. China has 200 billion dollars in reserve. The same is happening in Russia and many other countries around the world.
The crucial question is if the US is able to make sure the oil transactions around the world will be done in Dollars. This will mean making sure the OPEC countries will do what the US want's and they must stop oil producing nations like Iraq, Iran and Venezuele from stepping over to the Euro. The Invasions of Iraq was not so much a profit maker but an Opec breaker giving a signal to oil producing countries that the US is not happy with going to the Euro. One could argue that that was also the reason for punishing Iran by calling them part of the axis of evil.
Of course it's possible that Europe and the US make an agreement on this, to prevent further economic conflict's in the future. Whatever happens it will have a huge impact on the world economy in the next decade.
edit- sorry for misspelling
The hegemony of the US economy is largely founded on the fact that the Dollar is the world's most important currency, 80% of all valuta transactions are done in Dollar's and approximatly 2/3 of the world's exports are in Dollar's. On top of that all loans given by the IMF are in Dollar's.
Because there are so many dollar's circulating outside the United States the US is able to have an enormous trade deficit. Last year the import into the United states was 48% than the US export. No other country can maintain such a huge trade deficit for such a long time. This in fact makes sure the US gets enormous interest free lones from the rest of the world and they don't have to do anything for it.
The hegemony of the Dollar makes sure the US is making dollars and the world is making product's to make sure they have enough dollars in reserve to pay foreign debts and secure there own Valuta.
'Per definition Dollar reserves must be invested in the US creating Capital surplus in the US economy, this surplus finances the US trade deficit. On top of that you could state that every possesion in Dollar's is in fact an American owned property. When oil by us intervention is payed in Dollar's and the Dollar is the only world currency the US infact's get their oil for free. And the more Dollar the US produce the more American possesion will increase in value. A strong dollar policy gives the US a double profit" (Asian Times)
Euro
Since recently their has been a new kid on the block in the form of the Euro. And their indications that in the Euro is contesting with the Dollar for the price of being the world's leading currency. Of course the Euro zone is an enormous economicaly powerfull block. One of the main goals when introducing the Euro was to make the Euro the world's most important reserve currency, this will let Europe enjoy a free increase in capital, like the Dollar has now.
This will be desatrous for the United States, not only will it mean they will lose their free investment's and products, but countries will also be forced to exchange (partially) their Dollar reserves for Euro reserves. This will let the Dollar fall in value rapidly. The American import will become more expensive. When countries start chaging their Dollar posessions for Euro possesions this will also have an impact on the US stock market. The FED will not be able to print more dollar's to cope with the situation, while their wont be foreing buyers for those dollars. It will only increase the inflation and thus the crises.
Now what's the main obstacle to making the Euro the world's leading currency? The answer is oil. Oil is the most important good that's being traded world wide. It's also a must have for all modern economies, If you don't have oil, you have to buy it and to by it you need Dollars.
These oil Dollars are called petrodollars and the US print hunderds of billions of these which are used bu countries to buy oil. These pertodollars come back to the US in the form of bonds stocks or possesions in dollars. As long as countries need dollars to buy oil Amercian economic hegemony is ensured.
Cóilín Nunan: This situation means the US controls the world trade in an effectibe manner: You can only by oil if you have dollars and the only one with the right to make Dollars is the United States.
But what is the case. Many oil producing nations are thinking about getting rid of the Dollar for their oil exchange's and stepping over to the Euro. The Euro zone is a bigger importer of oil then the US, and the political situation in the middle east is such that getting rid of the dollar is very popular. And change from dollar to euro will have huge consequences for the US economy. And every country that makes a suggestion which could lead to that to happen can be sure America won't like it.
And what is the case? Iraq was the first oil producing country that changed to Euro's in 2000. Because of the fast rise in value of the Euro this was highly profitable, and other countries started to tink about it as well. Iran was the second country that stated it is thinking about doing it.
What's extra alarming for the US is that the middle east is not the only part of the world stepping over. China a country that's on second place when it comes to money reserves has stated it will exchange their reserves from Dollar's to Euro's. China has 200 billion dollars in reserve. The same is happening in Russia and many other countries around the world.
The crucial question is if the US is able to make sure the oil transactions around the world will be done in Dollars. This will mean making sure the OPEC countries will do what the US want's and they must stop oil producing nations like Iraq, Iran and Venezuele from stepping over to the Euro. The Invasions of Iraq was not so much a profit maker but an Opec breaker giving a signal to oil producing countries that the US is not happy with going to the Euro. One could argue that that was also the reason for punishing Iran by calling them part of the axis of evil.
Of course it's possible that Europe and the US make an agreement on this, to prevent further economic conflict's in the future. Whatever happens it will have a huge impact on the world economy in the next decade.
edit- sorry for misspelling
