Quote:
Originally Posted by tabs
In 67 DeGaulle demanded that the USD's that were being left behind by American tourists be repriated for Gold at the fixed rate of $35 an oz. He then would sell the Gold off at apx $110 an oz in Europe which was reflective of the true worth of the USD on the world market.
The French were tired of supporting an over valued USD. That is the reason why Nixon in 72 decoupled the USD from Gold. But to maintain USD as the reserve currency the US made a deal with the Saudis that all oil transactions be settled in USD.
The US needs the Saudi's...and that is why the Chinese oil exchange being settled in RMB backed by Gold is a dagger aimed right at the American heart. USD hegemony. With out hegemony America is fked.
Why are the Chinese setting up their own OIL exchange ....abject fear about American monetary and fiscal policy. They see America headed for the cliff of oblivion and are trying desperately to avoid going over with the US.
I wrote about that in 09.
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I think the current US govt is overplaying its hand. They think that because the USD is the dominant global reserve currency and almost every major company/govt needs access to the US banking system, they can arbitrarily and unilaterally dictate terms to anyone.
Certainty the US has immense power due to the central role of its currency/banks. In the short term we can bully almost anyone. But if we are perceived by others as abusing that power too much, others will eventually find a way to side-step the USD/US banks if they have the power. The Chinese may have the power, they see breaking free from dependence on USD/US banks as a matter of national survival, and they are accumulating allies as fast as we are alienating ours.
When and if the USD loses its reserve status and international transactions can bypass the reach of US banking regulators, we will suffer pain vastly greater than whatever dubious benefits we think we're getting today.
Our govt thinks transactionally and in months/years. They need to think strategically and in decades.