- Sep 27, 2005
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The war in Iraq started 3 years ago on March 20th and now the war on the American ecomomy starts tomorrow, how ironic. Iran will start to sell their oil for euros on Monday, which could bring down the American ecomomy. Bush wants to bomb them/like Iraq who had the same plan to sell oil for euros.
Last year the US trade deficit for petroleum products was about $300 billion. While the $US remains the international reserve currency and oil continues to be traded in dollars, the US can pay for its oil simply by printing more IOUs in the form US treasury bills.
If the US had to find euros (or yuan) to pay for its oil, it would have to increase taxes, cut consumption and increase exports. In short, according to this scenario, the US could no longer afford to be a military superpower and would have to cut back its global adventures.
In the process, the $US would collapse, wiping out the accumulated financial assets of America's major creditors and probably causing a depression of 1930s dimensions. More generally, such a development opens up the question of whether the reserve status of the $US is supporting US superpower status, or whether US military power is propping up the reserve currency status of the $US.
WHILE the possibility of oil trading in euros and the yuan present a possible long-term threat to US economic and military hegemony, it doesn't have to be dealt with immediately.
Similarly, the threat of a nuclear-armed Iran is at least some years into the future. But even with nuclear weapons and the missiles to deliver them and the control systems to guide them, deterrence and the doctrine of mutually assured destruction (MAD) applies to Iran as much as it did to the Soviet Union.
Last year the US trade deficit for petroleum products was about $300 billion. While the $US remains the international reserve currency and oil continues to be traded in dollars, the US can pay for its oil simply by printing more IOUs in the form US treasury bills.
If the US had to find euros (or yuan) to pay for its oil, it would have to increase taxes, cut consumption and increase exports. In short, according to this scenario, the US could no longer afford to be a military superpower and would have to cut back its global adventures.
In the process, the $US would collapse, wiping out the accumulated financial assets of America's major creditors and probably causing a depression of 1930s dimensions. More generally, such a development opens up the question of whether the reserve status of the $US is supporting US superpower status, or whether US military power is propping up the reserve currency status of the $US.
WHILE the possibility of oil trading in euros and the yuan present a possible long-term threat to US economic and military hegemony, it doesn't have to be dealt with immediately.
Similarly, the threat of a nuclear-armed Iran is at least some years into the future. But even with nuclear weapons and the missiles to deliver them and the control systems to guide them, deterrence and the doctrine of mutually assured destruction (MAD) applies to Iran as much as it did to the Soviet Union.
