War conspiracy theory of the week

[andrewducker]

Spread this one as far as you can...

Imagine that the Dollar is doing badly and the US economy is performing a slow slide. The major thing holding the dollar up is that national and transnational organisation need large amounts of it in their reserves. For instance, all oil-buying countries need dollars because OPEC (the Arab alliance of oil producing countries) sells only in dollars.

Iraq switched to selling in Euros instead. It looked like a bad move financially for him, but has looked much better as the Euro overtook the dollar. Apparently OPEC is considering following suit. Now, imagine the effect that would have on the US economy as everyone has to buy Euros instead of dollars - a 20% slide would be the best they could hope for.

Maybe the Gulf War is all about making sure that this doesn't happen?

(note, this doesn't mean I think that regime-change isn't necessary, but I'm not foolish enough to think that Bush's motives are aligned with mine.)

Comments

[derumi.livejournal.com]

Heck, I'd love to see the US and Canada adopt the Euro, too. What'd hold us back, and what'd be the downside to an international currency?

[andrewducker]

That's a very good question. Basically, it only works if your economies are somewhat similar and stable. Otherwise, you can't change interest rates for your country to affect the econonomy, because then everyone elses would change with you.

Other than that, there's no real reason.

[derumi.livejournal.com]

Whoa. Well now my question is why the hell would Europe adopt the Euro... Or do not all EU nations use it?

[andrewducker]

Because it makes transnational transactions much much easier and cheaper. It also gives you a much stronger currency. There's no way that OPEC would start working in pounds, there's not enough of them about, but dollars and euros are sufficiently strong and common to make them an easy global currency.

It's a real pain having to change currency (with the associated fees) whenever you cross a border.

A few countries stayed out of the Euro, Britain being one of them. But I suspect it'll end up in there eventually.