Robert Fisk reports in today’s Independent, that Gulf Arabs, China, Russia, Japan and France plan to end dealing in dollars for oil.
There are many who have argued that it was Saddam Hussein’s decision to start trading oil in Euros, rather than dollars, that was a key factor in the decision to invade Iraq, and the US have long been opposed to any change in this current trading system because, without the world needing US dollars in order to buy and sell their oil, the United States’ role as economic superpower could be severely undermined.
Without the need for US dollars on the international oil market, central banks across the world will want to replace their stock of US dollars with the new oil-buying currency instead. When the banks stop buying dollars, then the value of the dollar will fall. When the banks get rid of the dollars that they have, and flood the international money markets with the now unwanted and unusable currency, the value of the dollar will plummet.
If you have ever wondered how a country as rich as America can still be in over a trillion dollars of debt, and yet maintain their appearance of affluence, it is because their unsustainable economy has been propped up for years by loans from countries eager to receive pay back in oil-friendly, US dollars.
Can you imagine what happens to that debt, however, when the dollar becomes unfit for purpose?
This might just be the most important news story of the next nine years…