Demise of the Petrodollar: Gazprom's Possible Switch to Euros

[georgephillip]

What economic effects could Americans reasonably expect if the US petrodollar goes the way of Bretton Woods?

"MOSCOW, June 06./ITAR-TASS/. Gazprom Neft had signed additional agreements with consumers on a possible switch from dollars to euros for payments under contracts, the oil company's head Alexander Dyukov told a press conference.

"'Additional agreements of Gazprom Neft on the possibility to switch contracts from dollars to euros are signed. With Belarus, payments in roubles are agreed on,' he said.

"Dyukov said nine of ten consumers had agreed to switch to euros."

ITAR-TASS: Economy - Gazprom signs agreements to switch from dollars to euros

 

[georgephillip]

"By perpetually expanding the U.S. money supply, America’s standard of living increases as well. (If this logic does not make sense, be sure to go back and read Part One of this series.)

"The only problem with this situation is that the only way that it can be sustained is if the demand for the dollar and for U.S. debt securities remains consistently strong.

"Grasping this last point is extremely important.

"For if the artificial global dollar demand, made possible by the petrodollar system, were ever to crumble, foreign nations who had formerly found it beneficial to hold U.S. dollars would suddenly find that they no longer needed the massive amounts that they were holding.

"This massive amount of dollars, which would no longer be useful to foreign nations, would come rushing back to their place of origin… America.

"Obviously, an influx of dollars into the American economy would lead to massive inflationary pressures within our economic system."

The Petrodollar Wars | The Iraq Petrodollar Connection

 

[ZenBubba]

I'm surprised that so few Americans grasp the significance of this story.

 

[CrusaderFrank]

Obama's Jihad on America isn't done yet.

This is HUGE!

 

[dilloduck]

I'm surprised that so few Americans grasp the significance of this story.

The American public education system doesn't want people to know how the economy "works".

In the meantime Congress is holding hands and singing "we shall overcome".

 

[Kimura]

What economic effects could Americans reasonably expect if the US petrodollar goes the way of Bretton Woods?

"MOSCOW, June 06./ITAR-TASS/. Gazprom Neft had signed additional agreements with consumers on a possible switch from dollars to euros for payments under contracts, the oil company's head Alexander Dyukov told a press conference.

"'Additional agreements of Gazprom Neft on the possibility to switch contracts from dollars to euros are signed. With Belarus, payments in roubles are agreed on,' he said.

"Dyukov said nine of ten consumers had agreed to switch to euros."

ITAR-TASS: Economy - Gazprom signs agreements to switch from dollars to euros

None. Zero. Zilch.

 

[Kimura]

What other country does the rest of the planet run a multi-hundred billion dollar surplus against year after year? The EU has a destructive economic model of austerity and wage suppression so they can be net exporters at any cost. And Rubles? LOL. Why would anyone want Rubles? So we can buy all the awesome real goods and services produced by the Russian Federation?

 

[georgephillip]

What economic effects could Americans reasonably expect if the US petrodollar goes the way of Bretton Woods?

"MOSCOW, June 06./ITAR-TASS/. Gazprom Neft had signed additional agreements with consumers on a possible switch from dollars to euros for payments under contracts, the oil company's head Alexander Dyukov told a press conference.

"'Additional agreements of Gazprom Neft on the possibility to switch contracts from dollars to euros are signed. With Belarus, payments in roubles are agreed on,' he said.

"Dyukov said nine of ten consumers had agreed to switch to euros."

ITAR-TASS: Economy - Gazprom signs agreements to switch from dollars to euros

None. Zero. Zilch.

In another article I've read lately, the claim was made that goods and services in the US would spike by 25% if all those petrodollars suddenly returned home. Do you find that credible?

 

[georgephillip]

I'm surprised that so few Americans grasp the significance of this story.

I find understanding the story to be challenging, at least, and I'm beginning to suspect the level of corruption in my government is far beyond what many Americans believe:

"As I write this in the early part of 2012, it is a safe assumption that most Americans carry a suspicion, however slight, toward the reasons that they were told the U.S. needed to invade Iraq back in 2003.

"It is simply not possible to explain the depths of the corruption that exist at the highest levels of government today.

"Those who have bought into the mainstream media’s portrayal of the American government as an institution who seeks the common good, they do well to recall the words of America’s own first national leader:

“'Government is not reason; it is not eloquent; it is force. Like fire, it is a dangerous servant and a fearful master.'” (President George Washington)

The Petrodollar Wars | The Iraq Petrodollar Connection

 

[Kimura]

What economic effects could Americans reasonably expect if the US petrodollar goes the way of Bretton Woods?

"MOSCOW, June 06./ITAR-TASS/. Gazprom Neft had signed additional agreements with consumers on a possible switch from dollars to euros for payments under contracts, the oil company's head Alexander Dyukov told a press conference.

"'Additional agreements of Gazprom Neft on the possibility to switch contracts from dollars to euros are signed. With Belarus, payments in roubles are agreed on,' he said.

"Dyukov said nine of ten consumers had agreed to switch to euros."

ITAR-TASS: Economy - Gazprom signs agreements to switch from dollars to euros

None. Zero. Zilch.

In another article I've read lately, the claim was made that goods and services in the US would spike by 25% if all those petrodollars suddenly returned home. Do you find that credible?

I have to disagree. Russia and China have been trading in Yuan/Rubles for oil and gas since 2010. It's part of their bilateral agreements. Iran also sells oil in Euro and has been for a number of years.

The US dollar is more dependent of the 17 trillion in real goods and services it’s producing, not some nebulous construct like the “petrodollar”. A nation’s currency is like a credit card tied to its production. The value is related to what our country produces and sells. This is why the Euro, Yen, Pound, Canadian Dollar, etc have value even though they aren't petrodollars, nor do they serve as reserve currencies in any capacity. This is a non-issue, it seems to get be a religion of sorts to the doomsday crowd, guys like Kyle Bass, Peter Schiff, and other glibertarian "economic experts". You'll notice 99% of these people gold bugs, metal nuts and monetary cranks.

 

[Toro]

A quarter of world trade is conducted in non-dollar currencies.

This is about as newsworthy as Gazprom trading in dollars.

 

[georgephillip]

A quarter of world trade is conducted in non-dollar currencies.

This is about as newsworthy as Gazprom trading in dollars.

What happens to the US economy if its dollar ceases to function as the world's reserve currency?

 

[Toro]

A quarter of world trade is conducted in non-dollar currencies.

This is about as newsworthy as Gazprom trading in dollars.

What happens to the US economy if its dollar ceases to function as the world's reserve currency?

Interest rates go up a bit.

 

[Kimura]

A quarter of world trade is conducted in non-dollar currencies.

This is about as newsworthy as Gazprom trading in dollars.

What happens to the US economy if its dollar ceases to function as the world's reserve currency?

Interest rates go up a bit.

It would depend. The worst case scenario would be that the USD depreciates against some other currency. It could happen but it's highly improbable. The FED sets the short-term rate, and the expectation of future FED policy is what essentially sets the longer term rates.

I can't but help to notice the majority of these dollar doomsday folks are libertarians, gold bugs, metal nuts and monetary cranks (Austrians). The rest of the world are users of the dollar, they aren't issuers, so we can never be held hostage by Russia, China or any other country (obviously, you know this, just sayin' ).

 

[Toro]

What happens to the US economy if its dollar ceases to function as the world's reserve currency?

Interest rates go up a bit.

It would depend. The worst case scenario would be that the USD depreciates against some other currency. It could happen but it's highly improbable. The FED sets the short-term rate, and the expectation of future FED policy is what essentially sets the longer term rates.

I can't but help to notice the majority of these dollar doomsday folks are libertarians, gold bugs, metal nuts and monetary cranks (Austrians). The rest of the world are users of the dollar, they aren't issuers, so we can never be held hostage by Russia, China or any other country (obviously, you know this, just sayin' ).

George isn't a libertarian. He's one of these extreme Naomi Klein types.

 

[Kimura]

Interest rates go up a bit.

It would depend. The worst case scenario would be that the USD depreciates against some other currency. It could happen but it's highly improbable. The FED sets the short-term rate, and the expectation of future FED policy is what essentially sets the longer term rates.

I can't but help to notice the majority of these dollar doomsday folks are libertarians, gold bugs, metal nuts and monetary cranks (Austrians). The rest of the world are users of the dollar, they aren't issuers, so we can never be held hostage by Russia, China or any other country (obviously, you know this, just sayin' ).

George isn't a libertarian. He's one of these extreme Naomi Klein types.

I know. I meant the site he linked from, no offense to him.
[MENTION=2926]Toro[/MENTION]

This douche: Jerry Robinson

 

[Toro]

Yeah, most of them are.

I've made more money trading gold than anything, but gold is a commodity, not an ideology. Too many of them treat it as an ideology.

 

[georgephillip]

None. Zero. Zilch.

In another article I've read lately, the claim was made that goods and services in the US would spike by 25% if all those petrodollars suddenly returned home. Do you find that credible?

I have to disagree. Russia and China have been trading in Yuan/Rubles for oil and gas since 2010. It's part of their bilateral agreements. Iran also sells oil in Euro and has been for a number of years.

The US dollar is more dependent of the 17 trillion in real goods and services it’s producing, not some nebulous construct like the “petrodollar”. A nation’s currency is like a credit card tied to its production. The value is related to what our country produces and sells. This is why the Euro, Yen, Pound, Canadian Dollar, etc have value even though they aren't petrodollars, nor do they serve as reserve currencies in any capacity. This is a non-issue, it seems to get be a religion of sorts to the doomsday crowd, guys like Kyle Bass, Peter Schiff, and other glibertarian "economic experts". You'll notice 99% of these people gold bugs, metal nuts and monetary cranks.

What changes when the US begins exporting crude oil again?

"We’ve the news that the US is to allow some crude oil exports for the first time since the ban on them was set in place in the 1970s. This is good news as it removes an economic inefficiency (and removing economic inefficiencies is always good news) but it’s not going to make all that much difference to the nation as a whole. It’s really all a fight between the independent crude producers and the independent refiners. They, obviously, care about how this goes, crude exports or no crude exports, but it makes very little difference to the rest of us."

The US To Allow Crude Oil Exports; Not That It Will Make Much Difference - Forbes

 

[jwoodie]

What happens to the US economy if its dollar ceases to function as the world's reserve currency?

Interest rates go up a bit.

It would depend. The worst case scenario would be that the USD depreciates against some other currency. It could happen but it's highly improbable. The FED sets the short-term rate, and the expectation of future FED policy is what essentially sets the longer term rates.

I can't but help to notice the majority of these dollar doomsday folks are libertarians, gold bugs, metal nuts and monetary cranks (Austrians). The rest of the world are users of the dollar, they aren't issuers, so we can never be held hostage by Russia, China or any other country (obviously, you know this, just sayin' ).

I can't help but to notice that you resort to name calling to defend your views.

 

[Kimura]

Interest rates go up a bit.

It would depend. The worst case scenario would be that the USD depreciates against some other currency. It could happen but it's highly improbable. The FED sets the short-term rate, and the expectation of future FED policy is what essentially sets the longer term rates.

I can't but help to notice the majority of these dollar doomsday folks are libertarians, gold bugs, metal nuts and monetary cranks (Austrians). The rest of the world are users of the dollar, they aren't issuers, so we can never be held hostage by Russia, China or any other country (obviously, you know this, just sayin' ).

I can't help but to notice that you resort to name calling to defend your views.

If it looks like a duck, quacks like a duck and walks like a duck, it's a duck.