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Some Indian thinkers are interpreting the U.S.-led attack on Iraq as part of the "clash of civilisations"
between the "C hristian" West and the Islamic world. Such facile academic theories can mislead both the public
and policy makers into thinking that the world is simpler than it really is, leading to policy decisions that can
have unforeseen consequences.
To see this, one has only to visit another popular theory 40 years ago called the "domino effect." It held that
one country becoming communist would inevitably lead to its neighbours also becoming communist. Belief in
this theory led to U.S. entanglement in Vietnam the wounds of which have still not healed. One may see the
clash of civilisations as the academic theory that is playing today the same role as the domino effect theory
did in the C old War era. They both offer attractive but unsound simplifications.
The ground situation today, especially after the U.S.-led attack on Iraq, gives scant support to the clash of
civilisations thesis. The assumption, generally unstated, is that it is part of a conflict between the `C hristian'
West and the Islamic world. This belief appears to be particularly strong in India and the Islamic world. It is
based on the fundamental misconception that religion (C hristianity) plays the same role in the West as
Hinduism and Islam play in the East. The reality is that the West, Europe in particular, sees itself not as
C hristian but secular humanistic. Unlike Indians — both Hindus and Muslims — many of who are prepared to
lay down their lives to defend their religion, it would be hard to find a handful of Europeans prepared to do so
in the defence of C hristianity or the C hurch. In accepting Huntington's clash of civilisations thesis, Indians and
other Asiatics have essentially projected their own religiosity on to the people and countries of the West.
Interestingly, Westerners, Americans in particular, are making the opposite mistake by applying secular
humanistic measures in interpreting the deeply religious East. The fact that their contact is limited to the
Westernised urban elite, which they take to be representative of the country as a whole, has only reinforced
their misperceptions.
............
In a recent article titled "It's not about oil or Iraq; it's about the U.S. and Europe going head-to-head on world
economic dominance," the Australian economist and columnist Geoffrey Heard wrote: " Why is George Bush
so hell bent on war with Iraq? Why does his administration reject every positive Iraqi move? It all makes
sense when you consider the economic implications for the USA of not going to war with Iraq. The war in Iraq
is actually the U.S. and Europe going head to head on economic leadership of the world. "
Heard then goes on to explain how Iraq has become the unwitting battleground — "beachhead" in Heard's
terminology — in this economic war following Iraq's decision to switch from dollar to euro in its oil sales. In his
words: " It is about the currency used to trade oil and consequently, who will dominate the world
economically, in the foreseeable future — the USA or the European Union. ...Iraq is a European Union
beachhead in that confrontation. America had a monopoly on the oil trade, with the U.S. dollar being the fiat
currency, but Iraq broke ranks in 1999, started to trade oil in the EU's euros, and profited. If America invades
Iraq and takes over, it will hurl the EU and its euro back into the sea and make America's position as the
dominant economic power in the world all but impregnable. America's allies in the invasion, Britain and
Australia, are betting America will win and that they will get some trickle-down benefits for jumping on to the
U.S. bandwagon. "
..............
As long as the dollar remains the dominant currency, especially in oil trade, it is difficult to see how the U.S.
can be dislodged from its position as the world's dominant economic power. A small crack appeared in 1999
when Iraq, at France's persuasion, agreed to accept payment for its oil in euro. At first this seemed unwise as
the euro was selling well below the dollar. But now with the euro at a premium Iraq reaped a huge profit. This
made other oil producers take note of Iraq's success. As Geoffery Heard noted: "Iran started thinking about
switching too; Venezuela, the 4th largest oil producer, began looking at it and has been cutting out the dollar
by bartering oil with several nations including America's bete noire, C uba. Russia is seeking to ramp up oil
production with Europe (trading in euros) an obvious market." It is probably not accidental that the U.S. put
pressure on Iran by naming it a member of the "axis of evil," and tried also to destabilise the democratically
elected Venezuelan government with the help of business interests friendly to America.
................
It is worth noting that the U.S. is the most indebted country in the world with domestic and international debt
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approaching 3.4 trillion dollars or $12,000 for each man, woman and child in America. A long term weakening
of the dollar due to its slipping hold on the world oil trade can have serious consequences for American
prosperity and also its capacity to finance its military expenditure through deficit financing. That is to say, the
euro threatens America's economic power as well as its military power.
.................
This may help explain why the U.S. abruptly shifted its attention from the war in Afghanistan to a major war in
Iraq. Its goals, in Heard's words, are to "safeguard the American economy by returning Iraq to trading oil in
U.S. dollars, so the greenback is once again the exclusive oil currency. (Also) send a very clear message to
any other oil producers just what will happen to them if they do not stay in the dollar circle. ...Place the
second largest reserves of oil in the world under direct American control. Provide a secular, subject state
where the U.S. can maintain a huge force... to dominate the Middle East and its vital oil." The war in Iraq may
be a war for oil, but at a deeper level it is a war for the defence of the continued control of the world oil
economy through the dollar.
.................
Probably more the "ease of getting it", was the initial reason why the hoarding of US dollars.
Yes, I too think that this was more the reason for the war, the change to the EU dollar, as it makes a HUGE
difference what currency oil is traded in.
But it shold be noted that the US presently accounts for about 45% of the Worlds economy, less then the
requisite 51% majority shareholdership that is needed to be seen as "In a C ontroling position', hence the
War, a "controling position" established!
As for the article, I've never seen a more thorough and elegant analysis before. Every chain in the link made
sense, so to speak.
- S.
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C linton had already signed the Iraq Liberation Act, calling for the removal of Saddam Hussein's regime.
Perhaps we should ponder the possibility that Saddam had switched to the Euro in order to influence the
Europian block to support his already targeted regime as it would appear that is the order of events.
Adding to that, now, is this huge threat to the US economy which started with Saddam's switching to Euro. We
should have been surprised only if the US did not attack Iraq !
" In 1999, Iraq, with the world's second largest oil reserves, switched to trading its oil in euros. American
analysts fell about laughing; Iraq had just made a mistake that was going to beggar the nation. But two years
on, alarm bells were sounding; the euro was rising against the dollar, Iraq had given itself a huge economic
free kick by switching.
Iran started thinking about switching too; Venezuela, the 4th largest oil producer, began looking at it and has
been cutting out the dollar by bartering oil with several nations including America's bete noir, C uba. Russia is
seeking to ramp up oil production with Europe (trading in euros) an obvious market.
The greenback's grip on oil trading and consequently on world trade in general, was under serious threat. If
America did not stamp on this immediately, this economic brushfire could rapidly be fanned into a wildfire
capable of consuming the US's economy and its dominance of world trade. "
................
" Imagine this: you are deep in debt but every day you write cheques for millions of dollars you don't have --
another luxury car, a holiday home at the beach, the world trip of a lifetime.
Your cheques should be worthless but they keep buying stuff because those cheques you write never reach
the bank! You have an agreement with the owners of one thing everyone wants, call it petrol/gas, that they
will accept only your cheques as payment. This means everyone must hoard your cheques so they can buy
petrol/gas. Since they have to keep a stock of your cheques, they use them to buy other stuff too. You write
a cheque to buy a TV, the TV shop owner swaps your cheque for petrol/gas, that seller buys some vegetables
at the fruit shop, the fruiterer passes it on to buy bread, the baker buys some flour with it, and on it goes,
round and round -- but never back to the bank.
You have a debt on your books, but so long as your cheque never reaches the bank, you don't have to pay.
In effect, you have received your TV free.
This is the position the USA has enjoyed for 30 years -- it has been getting a free world trade ride for all that
time. It has been receiving a huge subsidy from everyone else in the world. As it debt has been growing, it
has printed more money (written more cheques) to keep trading. No wonder it is an economic powerhouse!
Then one day, one petrol seller says he is going to accept another person's cheques, a couple of others think
that might be a good idea. If this spreads, people are going to stop hoarding your cheques and they will come
flying home to the bank. Since you don't have enough in the bank to cover all the cheques, very nasty stuff is
going to hit the fan!
But you are big, tough and very aggressive. You don't scare the other guy who can write cheques, he's pretty
big too, but given a 'legitimate' excuse, you can beat the tripes out of the lone gas seller and scare him and
his mates into submission.
And that, in a nutshell, is what the USA is doing right now with Iraq. "
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There's this very real and huge threat to the US economy, T. The US engages in act A, which, surprisingly
enough, negates T.
What are the odds that T was not the cause of A ? Hmmmm .... ?
- S.
I'll preserve my use of morality for my family, friends, and people that think like me. The rest of the world
can kiss my butt. They do nothing for the propagation of my genetic code. However, I am willing to give some
of you misguided liberal ladies a chance to help me propagate my code. I'm free Saturday night. C are to be
dominated by a testoserone crazed male?
I'll preserve my use of morality for my family, friends, and people that think like me. The rest of the world
can kiss my butt. They do nothing for the propagation of my genetic code. However, I am willing to give some
of you misguided liberal ladies a chance to help me propagate my code. I'm free Saturday night. C are to be
dominated by a testoserone crazed male?
Then you might notice by Darwin there is no idea of "an axis of evil", or of one side claiming some sort of
absolute I am rightness. You might also notice that in many cases, a sense of cooperation, compromise, and
mutual understanding is more advantageous in survivial terms than being aggressive, paranoic and bigoted.
That may very well be, but, Saddam had already cleared his country of WMD's by then and also knew you
had no case against him in any court for any violation of the UN's resolutions, perhaps he waited, or went
forward, on the belief that America wouldn't attack without cause, and he already KNEW you didn't have one.
He knew that because it was, as we can now, see clearly, and evidentualy, a part of HIS plan to turn "rabbit",
and void himself of any possibility of being/looking guilty, as to give the US, or the UN reason to attack.
It was on that basis that he would have decided to then switch to the EURO, that's when he would have been
what, plotting revenge?
EDIT SP!
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damgo Apr25-03, 08:08 PM
OK, this is just kind of ridiculous. First, the majority of the US federal debt is in the form of domestic Treasury
bonds -- ie, it is a debt to its own citizens. Also, Iraq was dirt poor before 1999 and it was dirt poor after: it's
been like that pretty much since the sanctions started in '91. And I don't know much about the global currency
market, but I think I know enough to say that the idea that the euro is going to massively undercut the dollar
because Saddam starts using it to sell the tiny amount of oil he is allowed -- that's absurd. In any case, if this
theory were true, the euro should have been hit after the invasion, right? It's still at $1.1 last I checked.
There are plenty of simple economic benefits for the US to invade Iraq -- a lever against OPEC price controls,
increased supply by re-opening Iraq's large reserves, an oil supply not vulnerable to civil unrest in Saudi
Arabia -- why invent strange currency theories?
There's this very real and huge threat to the US economy, T. The US engages in act A, which, surprisingly
enough, negates T.
What are the odds that T was not the cause of A ? Hmmmm .... ?
- S. My point was about C linton - he was anti-iraq, but since it doesn't fit the theory, throw it out. There really
is no threat to the US economy besides the oil supply issue. Like damgo said - supply of oil is so important,
why make up this other ludicrous issues?
If there is any valid reason to oppose the war, US economic imperialism is it. Use it. No need to make up
other convoluted conspiracy theories.
It seems that there was more at stake than just Iraq switching to the Euro.
Just because the Euro is still at $1.1 doesn't mean this war definitely was not motivated by the Dollar/Euro
battle, because..
A) regardless of what is playing out and will play out, those behind the war could have thought that things
would turn out differently
B) There is still time for change. The war didn't start but a month ago.
C ) Has the Euro gone up or just not gone down? How do you know that it wouldn't be gaining more ground
against the dollar if it had not been for this war?
There are plenty of simple economic benefits for the US to invade Iraq -- a lever against OPEC price controls,
increased supply by re-opening Iraq's large reserves, an oil supply not vulnerable to civil unrest in Saudi
Arabia -- why invent strange currency theories?
How much of a level would you have if oil was traded in Euro's?
That is actually the point, traded in Euro's, and America has much less of a lever against anyone, not just
OPEC .
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As for owning 'yourselves' the money, pay it out, and you will flood your own market place, with cash, and
your dollar value will drop, probably substantively.
I'll preserve my use of morality for my family, friends, and people that think like me. The rest of the world
can kiss my butt. They do nothing for the propagation of my genetic code. However, I am willing to give some
of you misguided liberal ladies a chance to help me propagate my code. I'm free Saturday night. C are to be
dominated by a testoserone crazed male? I have read a lot of Darwin and evolutionary psychology and
sociobiology. And none of that suggests the is-ought fallacy that you're advocating here.
What is is not always (in fact seldom is) what ought to be.
The might is right, nature red in tooh and claw world is hardly one where I'd want to live in ... and I suspect
few others would want to either.
And if that was really the case, why does the US try and rationalise its position with so much sanctimonious
bull**** ?!
- S.
If there is any valid reason to oppose the war, US economic imperialism is it. Use it. No need to make up
other convoluted conspiracy theories. Ludicrous ?? C onvoluted ??
Its the most straightforward reason ever for waging war.
A threat to one's economic supremacy.
- S.
1) OPEC doesn't choose what currency oil is priced in. The petroleum markets as a whole do that; there are
major ones in the USA and in Britain that I know of; probably some in the EU too. They are free to change
whenever they want; but since there is a huge financial system built around dollar pricing this entails a fair bit
of effort and cost.
2) OPEC countries and their customers can choose to pay for oil in Euros, if they want; but since the market is
in dollars this entails some additional risk due to exchange rate fluctuations. What actually happens is that
companies use financial derivates (eg futures and options) to elimiate this risk, at the cost of a small
surcharge. However, it is likely that the benefits of using Euros when trading with the EU countries will
eventually outweigh this; so I wouldn't be surprised if the Gulf countries started switching to the Euro for
these contracts once the currency becomes more acceptable. Obviously there is no reason to stop using
dollars when trading with the USA.
3) The use of the dollar as a global reserve currency is a product of US economic success; not the cause -- it
doesn't take a lot of economics to see how ridiculous that is. Before 1945, the British pound sterling was the
global currency; global markets tend to use the currency which is a) most stable and unlikely to fall victim to
massive inflation, and b) is widely used in international trade.
4) If banks around the world for some reason dumped all their dollar reserves, it would cause a major shock
to the US economy; it would also cause a major shock to those countries, too. And for some odd reason,
people with money don't like seeing economies collapse. [:)] If they did it slowly -- eg sanely -- the excess
currency would be absorbed by the US Federal Reserve, whose job it is to manage the currency supply.
5) Finally, realize that the USA only gets 10% of its oil from the Persian Gulf. Most of it is produced
domestically (the USA is the world's second-largest oil producer, behind only Saudi Arabia) or from C anada,
Mexico, and Venezuela. None of them have anything to gain by screwing around with Euros for oil trading,
given that the majority of their foreign trade is with the USA.
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I could go on... but what's the point? Monetary policy is a really deep, complicated subject -- of which I know
very little -- but the glaring problems with this should be evident even from Macroeconomics 101....
No offense to anyone; but I jsut find these types of things annoying, the same way as when creationists argue
that the 2nd Law of Thermodynamics "contradicts" evolution. Gaaah....
-damgo
No offense to anyone; but I jsut find these types of things annoying, the same way as when creationists argue
that the 2nd Law of Thermodynamics "contradicts" evolution. Gaaah....
I do understand how it might hurt an American if they're told that their huge economic superpower status is
based on little solid foundation. But then thats the religion of patriotism. And you know those religious types
... [;)]
- S.
All but #5 also hold for most of the other highly successful modern economies -- Japan, Australia/New
Zealand, Western Europe, etc. Siv, if modern US economic success rested on the use of the dollar as a global
currency, why would these other countries be doing just as well? (or almost as well)
All the facts I listed should be easily checkable... which do you think are false?
All but #5 also hold for most of the other highly successful modern economies -- Japan, Australia/New
Zealand, Western Europe, etc. Siv, if modern US economic success rested on the use of the dollar as a global
currency, why would these other countries be doing just as well? (or almost as well)
All the facts I listed should be easily checkable... which do you think are false? [/B]
What natural resources does Japan have? Fish? I can't think of another country in the world that has as
plentiful and as diverse a supply of natural resources as the USA.
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I do understand how it might hurt an American if they're told that their huge economic superpower status is
based on little solid foundation. Damngo has articualated it far better than I could. But lets see if I can be
concise:
The economic superpower status of the US is based on our GDP. C anging the currency that people trade in (if
its even going to happen) will not change our GDP. It really is that simple.
So lets say for example the US dollar fell by 50% next year and economcic growth was flat. Instead of the
$10 trillion or so GDP, we'd have a $20 trillion or so GDP.
And the inflation that you're talking about arises from an expanded money supply. That's why it's called
inflation. Now, when the dollar drops for reasons other than an expanded money, supply, people have less
purchasing power.
And the inflation that you're talking about arises from an expanded money supply. That's why it's called
inflation. Now, when the dollar drops for reasons other than an expanded money, supply, people have less
purchasing power. Both are separate reasons for inflation. Inflation is simply a reduction in the value of our
money (relative to itself).
And 50% was an extreme hypothetical meant to make the math easier.
And 50% was an extreme hypothetical meant to make the math easier.
All but #5 also hold for most of the other highly successful modern economies -- Japan, Australia/New
Zealand, Western Europe, etc. Siv, if modern US economic success rested on the use of the dollar as a global
currency, why would these other countries be doing just as well? (or almost as well)
All the facts I listed should be easily checkable... which do you think are false?
Most of the rest of those countries do do well, because they are partners with the US, Trade partners, just like
C anada.
But a better question, one that might reveal the answer you seem to be looking for, is why some of the Other
countries do NOT do as well, that answer might just lead you to the realization of just "Why" it is so important,
to the American economy, to keep the Greenback as the Fiat currency, in the Oil business!
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