OP UPDATE: Iran to launch oil and gas exchange on Feb. 27

[NoStateofMind]

Originally posted by: TastesLikeChicken
Snip snap bull crap

Again, a circular argument with you. So many on this forum in many other threads have gone through idiotic tailspin topics with you but you use stupid responses and try to discredit people as a basis for your argument. Where are your facts that this isn't true? Your baseless flim flam thank you ma'am bullshit?

You haven't any idea about world economies nor how this effects the dollar as the worlds reserve currency.

This effects the dollar because:

1) The dollar won't be used by Iran.

2) Confidence is lost further in the dollar

3) Oil is the most desired product of many if not all countries and is denominated in U.S. dollars, therefore forcing nations to hold vast amounts of the dollar as reserves.

4) The more countries that switch to a stronger Euro to protect their market, the less they will keep in reserves of the dollar.

5) Those dollars then are sent back to the U.S. because its not needed.

6) Once #5 happens, all those billions coming home, there will be too much money in the supply chain and too few products which will in turn will cause massive inflation.

You probably still won't get it. I'm done talking to you about this subject because its clear you haven't a clue what you're talking about.

 

[TastesLikeChicken]

Originally posted by: PC Surgeon

Originally posted by: TastesLikeChicken
Snip snap bull crap

Again, a circular argument with you. So many on this forum in many other threads have gone through idiotic tailspin topics with you but you use stupid responses and try to discredit people as a basis for your argument. Where are your facts that this isn't true? Your baseless flim flam thank you ma'am bullshit?

You haven't any idea about world economies nor how this effects the dollar as the worlds reserve currency.

This effects the dollar because:

1) The dollar won't be used by Iran.

2) Confidence is lost further in the dollar

3) Oil is the most desired product of many if not all countries and is denominated in U.S. dollars, therefore forcing nations to hold vast amounts of the dollar as reserves.

4) The more countries that switch to a stronger Euro to protect their market, the less they will keep in reserves of the dollar.

5) Those dollars then are sent back to the U.S. because its not needed.

6) Once #5 happens, all those billions coming home, there will be too much money in the supply chain and too few products which will in turn will cause massive inflation.

You probably still won't get it. I'm done talking to you about this subject because its clear you haven't a clue what you're talking about.

What part of Iran doesn't trade the vast majority their oil in dollars do you not understand?

You are somehow under the mistaken impression that countries maintain reserves of dollars to use for buying oil when this is not the case. You also keep ignoring the fact about the exchange rate.

I'm glad you're finished with me because I've about had enough of your complete and utter ignorance when it comes to economics. Thsi thread isn't the first time you've demonstrated your complete lack of understanding of markets in this forum and I doubt it will be the last. Keep up the stupid.

 

[MixMasterTang]

Originally posted by: PC Surgeon

5) Those dollars then are sent back to the U.S. because its not needed.

6) Once #5 happens, all those billions coming home, there will be too much money in the supply chain and too few products which will in turn will cause massive inflation.

You probably still won't get it. I'm done talking to you about this subject because its clear you haven't a clue what you're talking about.

How are these dollars actually sent back to the U.S.?

 

[eits]

i've been watching american news all morning and haven't heard a damn thing about this story :| wtf america!?

 

[Icepick]

Originally posted by: eits
i've been watching american news all morning and haven't heard a damn thing about this story :| wtf america!?

I haven't seen it reported on in the BBC World News or the major news outlets of any other country for that matter. Performance degradation of the Internet network must not be high on their list of priorities.

 

[yllus]

Originally posted by: PC Surgeon
3) Oil is the most desired product of many if not all countries and is denominated in U.S. dollars, therefore forcing nations to hold vast amounts of the dollar as reserves.

5) Those dollars then are sent back to the U.S. because its not needed.

6) Once #5 happens, all those billions coming home, there will be too much money in the supply chain and too few products which will in turn will cause massive inflation.

Well, that proved beyond a shadow of a doubt you have absolutely no clue what you're talking about.

Just because something is denominated in dollars doesn't mean that's the only currency you can purchase that item with. Is that really that hard to grasp? They list the item in one currency for simplicity's sake, but they're take pesos, yen, diamonds or female virgins as long as the value matches up. Considering that the oil market is very obviously an international one you'd think this was obvious.

I don't even know what to say about the dollars being "sent back to the U.S." I doubt I want to know.

I suppose your ignorance isn't all your fault because professional journalists don't know what they're talking about either.

 

[sandorski]

Originally posted by: yllus

Originally posted by: TastesLikeChicken
It's not reported by the MSM because it's a tin-foil hat conspiracy theory with no credence whatsoever. When Iran sells oil it will still be traders purchasing the contracts. They will then resell those contracts so the oil will still end up on the open market. Nor does it matter whether the oil is denominated in dollars, euros, sheckels, or mickey mouse club points. So long as there's an international exchange rate for whatever valuation unit is used it makes no difference.

Of course, for those who seemingly salivate at the thought of the imminent downfall of the US, economic or otherwise, and rush to post every nutjob claim that reinforces that belief, nothing said here will matter.

What's that you say? An international market? But I was told by Mr. Tinfoil Aplenty that this is a disaster for the U.S. dollar!

I guess every day is a disaster for Canada that they don't use our dollar! A disaster for the British pound! A disaster for the Japanese yen! Someone, please stop the carnage!

Originally posted by: sandorski

Originally posted by: yllus

Originally posted by: sandorski

Originally posted by: yllus
Way to not answer the question.

Why would this mean disaster for the U.S. dollar?

Search for the older threads on the subject.

In other words, you don't know, but you're proclaiming it a disaster nonetheless.

No, IOW: I have gone over this before in other threads and don't wish to again. Search.

Liar. You simply don't know what you're talking about in the slightest.

whateva :roll:

 

[NoStateofMind]

Originally posted by: MixMasterTang

Originally posted by: PC Surgeon

5) Those dollars then are sent back to the U.S. because its not needed.

6) Once #5 happens, all those billions coming home, there will be too much money in the supply chain and too few products which will in turn will cause massive inflation.

You probably still won't get it. I'm done talking to you about this subject because its clear you haven't a clue what you're talking about.

How are these dollars actually sent back to the U.S.?

"sent back" isn't a good explanation, I agree.

1) The U.S. dollar is replaced by the Euro as reserve currency.

2) Since the dollar will not hold the reserve status, those countries that held reserves will now be transitioning into Euro

3) All those U.S. dollars that were reserves then flood the Eurozone states' banks

4) Then those dollars are spent in the U.S. for exports to Euro nations.

This mass influx of currency will undoubtedly cause inflation. Not just here, but also in those Eurozone states.

The only reason we are afloat at this point is because after WWII the Bretton Woods agreement in 1944 was made. At that time we held over 50% of the worlds gold reserve and we were also the worlds leading industrial power. We made an agreement that by them using our currency as their reserve, it would be backed by a % of gold. A no lose situation for them and win win for us. So it was in those nations best interest to use our currency as their reserve. Then in 1971, Nixon stopped the "run on gold" by saying that we would no longer honor gold in return for our dollars. Basically, we screwed them over. Now we get to where we are now. They are stuck with a reserve currency that is losing its value. Nothing but confidence backing our dollar, and as seen in the world, its losing its hegemony more each day.

Our founders wrote into the Constitution that that only gold & silver be legal tender payable for debts. They were against "Bills of credit" (fiat) because they had already went that route with the continental. Maybe you have heard people say "not worth a continental" before. But we instead go directly against what our founders taught and now are paying the price for it.

Today we have the Federal Reserve that prints money and doesn't give out its information on how much its printed. They use to release an M3 report which gave this information but in early 2006 the FED stopped producing the report. So the exact amount of the money supply is not known, secrecy leads me to believe they ramped up production.


There is something fishy going on and I'm afraid the people of this country are going to find out the hard way.

Sorry for ranting

 

[NoStateofMind]

Originally posted by: yllus
Just because something is denominated in dollars doesn't mean that's the only currency you can purchase that item with. Is that really that hard to grasp?

No, the denomination is only a one part. The other is the reserves. Reserves play a bigger role.

 

[Fern]

Originally posted by: PC Surgeon

Originally posted by: MixMasterTang

Originally posted by: PC Surgeon

5) Those dollars then are sent back to the U.S. because its not needed.

6) Once #5 happens, all those billions coming home, there will be too much money in the supply chain and too few products which will in turn will cause massive inflation.

You probably still won't get it. I'm done talking to you about this subject because its clear you haven't a clue what you're talking about.

How are these dollars actually sent back to the U.S.?

"sent back" isn't a good explanation, I agree.

1) The U.S. dollar is replaced by the Euro as reserve currency.

2) Since the dollar will not hold the reserve status, those countries that held reserves will not be transitioning into Euro

3) All those U.S. dollars that were reserves then flood the Eurozone states' banks

4) Then those dollars are spent in the U.S. for exports to Euro nations.

This mass influx of currency will undoubtedly cause inflation. Not just here, but also in those Eurozone states.

You've just decribed an incredible surge in US GNP.

A tremendous reduction inf our foreign trade deficit, which BTW we've managed to pay off with "cheaper/defalted" dollars (meaning they got screwed and we came out ahead).

Inflationary presures would appear, but that would be caused by our overheated economy.

Interest rates would be jacked up by the fed. The flood of treasury revenue resulting from the increased trade/production would reduce our deficit. Those 2 things would cause the value of our currency to rise (stronger dollar).

Congrats, you just unwittingly solved our economic problems. Special thanks also go to the Iranians

Fern

 

[ScottMac]

You know, it's not like nobody will ever see those cables again, they are repairable, and it's not that hard; it's just a matter of putting the resources in-place.

The people that own those cables will certainly know what happened to them once they're surfaced to be fixed. It's likely that most of this story is BS, and if it's not, there are many other ways of blocking Internet traffic without physically damaging the media.

The whole story smells like a tin-hat conspiracy ...

 

[heyheybooboo]

Originally posted by: Fern

Originally posted by: PC Surgeon

Originally posted by: MixMasterTang

Originally posted by: PC Surgeon

5) Those dollars then are sent back to the U.S. because its not needed.

6) Once #5 happens, all those billions coming home, there will be too much money in the supply chain and too few products which will in turn will cause massive inflation.

You probably still won't get it. I'm done talking to you about this subject because its clear you haven't a clue what you're talking about.

How are these dollars actually sent back to the U.S.?

"sent back" isn't a good explanation, I agree.

1) The U.S. dollar is replaced by the Euro as reserve currency.

2) Since the dollar will not hold the reserve status, those countries that held reserves will not be transitioning into Euro

3) All those U.S. dollars that were reserves then flood the Eurozone states' banks

4) Then those dollars are spent in the U.S. for exports to Euro nations.

This mass influx of currency will undoubtedly cause inflation. Not just here, but also in those Eurozone states.

You've just decribed an incredible surge in US GNP.

A tremendous reduction inf our foreign trade deficit, which BTW we've managed to pay off with "cheaper/defalted" dollars (meaning they got screwed and we came out ahead).

Inflationary presures would appear, but that would be caused by our overheated economy.

Interest rates would be jacked up by the fed. The flood of treasury revenue resulting from the increased trade/production would reduce our deficit. Those 2 things would cause the value of our currency to rise (stronger dollar).

Congrats, you just unwittingly solved our economic problems. Special thanks also go to the Iranians

Fern

Actually, no, Fern.

It would decrease foreign exchange liquidity and increase transaction costs when exporting from the US.

 

[heyheybooboo]

The Iranians 'euro' oil bourse has been around for awhile. It's not necessarily the 'idea' finally coming to fruition - it's all the secondary and tertiary bullshit that goes on behind it that could f'ck the US ....

Chickie is way off base on this one (but what else is new?). Trading in petrodollars makes the US currency the defacto international exchange. Everybody needs oil. If you need oil or sell oil you need petrodollars. It is the reserve currency in oil trading. This reduces costs in international markets ....

Now it seems that over the last 8 years the US 'dollar' share of foreign exchange reserves has started to decline significantly-depending upon 2007 possibly 10% overall. Over this same period, from nowhere, the Euro has increased nearly 50%.

If you factor in a 'switch' from petrodollars to petroeuros that would certainly further reduce 'dollar' foreign exchange reserves. To what extent, who knows? I will assume that this trend would tend to further diminish the value of the dollar against other currencies (which on one hand increases the value of US exports but on the other hand reduces foreign exchange liquidity and increases transaction costs ...)

"Oil exporters" hold US debt as a reserve - as the dollar falls I bet their T-Bills would, also ... certainly making it tougher to finance our debt)

China has been threatening for years to substantially shift their percentage of 'dollars' in foreign exchange reserves for other currencies further pushing down the value. I think I remember seeing that China Q4-07 had their biggest surplus ever - can't blame them for seeking a higher return. (Note to young people at AT - learn how to speak 'Asian')

It seems simple economics. The dollar's value continues to decline and international central banks want higher returns on their reserves so they will dump some of their dollars.

How this ends up /// who knows? I'd think the US would move to establish an international petro-coin. I mean, shit, just think how much gas would cost in the US if petroeuros were the exchange reserve 10 years ago ....

 

[TastesLikeChicken]

Originally posted by: beyoku
Hmm, maybe i dont get it, let me give you a personal example. Is there NOT a difference between this situation:
July 2006: 9 Ethiopian "Birr" worth 1 us dollar
Feb 2007: 8 Ethiopian "Birr" worth 1 us dollar
So if i wanted to purchase 100US Dollars in Corn, @ 100 Birr a bushel, in July i would get 9 bushels for my 100US but in Feb i would only get 8 Bushels of corn for my 100US.
So depending on the exchange rate, i may or many not be able to get my full 9 bushels as usual. Hmm, i still think there is a difference with a currency that has less of a fluctuation.

Although both times i only spend 100US, one month i still walk away with less corn.
I guess its confusing because the price of oil itself fluctuates sometimes because of the dollar itself. AHH hell, now you have gotten me confused...........I still think im right though.....Kinda.

Markets change over time and that holds true for both commodities like corn and petroleum and exchange rates. With the falling dollar right now you may be able to get 10 bushels of corn for your birr, or even more. What you desribe is also why the futures market exists. If you think in July that come Feb your birr will be worth less against the dollar you place a contract then for a fuure purchase of that corn at the current price in order to hedge against any devaluation of your currency.

 

[TastesLikeChicken]

Originally posted by: heyheybooboo
The Iranians 'euro' oil bourse has been around for awhile. It's not necessarily the 'idea' finally coming to fruition - it's all the secondary and tertiary bullshit that goes on behind it that could f'ck the US ....

Chickie is way off base on this one (but what else is new?). Trading in petrodollars makes the US currency the defacto international exchange. Everybody needs oil. If you need oil or sell oil you need petrodollars. It is the reserve currency in oil trading. This reduces costs in international markets ....

O...M...G!

Do you even realize that "petrodollars" is a term that defines money taken in by ME countries for their oil from western nations but it DOESN'T necessarily imply they are actual US currency? Petrodollars can be lira, pounds, marks...any number of western currencies.

Sheesh. What a poser you are.

 

[fskimospy]

The problem only exists if countries stop taking dollars altogether for their oil shipments as Iran is proposing. Then you DO in fact have a situation where people are forced to convert large amounts of dollars into other currencies to buy oil, and it could lead to the market being flooded with people trying to change dollars, thus lowering their price.

 

[jpeyton]

The dollar is already on the decline. Just look at the exchange rate trends for the last 2 years.

The Canadian dollar is worth more than the US dollar. That should be clue #1 that our currency is on the decline and we're in a world of trouble.

 

[Socio]

The scariest part of this whole scenario is with Bush gone their will be no that would actually stand in Iran?s way. I mean about the most we could possibly expect from Hillary, Obama or McCain will be finger pointing and posturing.

I think Iran will rule the roost so to speak as of 2009, and have their way, any way they want.

 

[jpeyton]

Originally posted by: Socio
The scariest part of this whole scenario is with Bush gone their will be no that would actually stand in Iran?s way. I mean about the most we could possibly expect from Hillary, Obama or McCain will be finger pointing and posturing.

I think Iran will rule the roost so to speak as of 2009, and have their way, any way they want.

It's a free f**king global market; we're not supposed to impede other countries. They have a commodity, and we want to buy it.

 

[Socio]

Originally posted by: jpeyton

Originally posted by: Socio
The scariest part of this whole scenario is with Bush gone their will be no that would actually stand in Iran?s way. I mean about the most we could possibly expect from Hillary, Obama or McCain will be finger pointing and posturing.

I think Iran will rule the roost so to speak as of 2009, and have their way, any way they want.

It's a free f**king global market; we're not supposed to impede other countries. They have a commodity, and we want to buy it.

We absolutely should if they are deliberately manipulating markets in order to collapse our economy, it is an act of war, no different than sending a missile in to a US city.

 

[NoStateofMind]

Originally posted by: Socio

Originally posted by: jpeyton

Originally posted by: Socio
The scariest part of this whole scenario is with Bush gone their will be no that would actually stand in Iran?s way. I mean about the most we could possibly expect from Hillary, Obama or McCain will be finger pointing and posturing.

I think Iran will rule the roost so to speak as of 2009, and have their way, any way they want.

It's a free f**king global market; we're not supposed to impede other countries. They have a commodity, and we want to buy it.

We absolutely should if they are deliberately manipulating markets in order to collapse our economy, it is an act of war, no different than sending a missile in to a US city.

What? So now ALL countries MUST adhere to U.S. demands and/or our interests economy wise?

 

[TastesLikeChicken]

We don't purchase Iranian oil. The US banned the import of Iranian oil in 1979 and that still holds to this day.

 

[jpeyton]

Originally posted by: Socio
We absolutely should if they are deliberately manipulating markets in order to collapse our economy, it is an act of war, no different than sending a missile in to a US city.

They're creating the IOB to get better returns for their product. The only reason people are moving away from the dollar as a reserve currency is because we've driven its value down with our poor fiscal policies.

If Iran doesn't want to trade favorably with the US, sanction them. We have no right to attack them.

 

[fskimospy]

It's a global commodity though, so it doesn't really matter who we are buying it from... Iranian moves cause the same effects.

 

[TastesLikeChicken]

Originally posted by: eskimospy
It's a global commodity though, so it doesn't really matter who we are buying it from... Iranian moves cause the same effects.

As far as supply goes, yes. Iran opening their own bourse will have little impact. They produce about 5% of the world's oil. While it's nothing to sneeze at it's also not all that significant.

There are also drawbacks to the IOB. Large trading markets like NYMEX have a reputation, history, and mechanisms in place to ensure contracts are properly executed. How many countries/traders are going to trust Iran not to screw them over with their little (in comparison) bourse? What happenes when Iran doesn't follow through on a contract or contracts? Are they going to permit a world trade body to arbitrate? Unlikely.

People are trying to create a much scarier monster out of this IOB than what it really is. This isn't a hurricane or even a thunderstorm. It's a minor downdraft and little more.