M3, Oil & Iran

Whoa. This is a cool article.

Dail Kos: A Story About Oil You NEED To Hear

To sum it up:

The US Fed is going to eliminate reportage of M3, or eurodollars, which are US dollars held in non- American banks.

There are several possible reasons for it, but the main one is that this move could allow the Fed to obscure a massive US currency devaluation.

The US is a major debtor, and unanticipated inflation is the debtor’s best friend.

Here’s a real zinger, from a letter to the editor at teamliberty.net:

I have yet to read in the Post & Courier, any story regarding Iran’s opening of the Iran Oil Bourse in March 2006. A bourse is an exchange; like a stock exchange. The Iran Oil Bourse will become only the third oil exchange in the world. Currently, all oil purchased in the world, every ounce of it, is purchased with U.S. dollars. If China buys oil from Russia, they do so with U.S. dollars. If Chile buys from Venezuela, again the transaction is made in U.S. dollars. In 2000, Saddam Hussein defied the U.S. dollar supremacy for oil purchases and declared that Iraqi oil would only be allowed to be purchased with euros. Suddenly, if China wanted to purchase oil from Iraq, it didn’t need U.S. dollars.

. . .

Suddenly, hundreds of billions of U.S. dollars will no longer be necessary for every nation of the world to hold so that they can purchase oil. If nations desire to dump all their dollars, they will be able to do so and still be able to purchase oil. If, or when this occurs, the U.S. dollar will be weakened to such a degree that it could be rendered worthless. When this happens, inflation in the United States will reach levels that will make the Great Depression of the 1930’s look like a decade of gluttony.

The truth is that because of our government selling out to the Federal Reserve nearly 100 years ago, America is now stuck with a worthless, dangerous fiat currency with zero commodity backing, and the only way we can sustain it is with bullets. The threat of nuclear weapons will be how the government and newspapers like the Post & Courier lead the American people into war with Iran, but the truth is we must destroy Iran’s Oil Bourse; not its nuclear power plants.

So here’s the jist of the matter: it ain’t all about oil. It’s about the fact that the entire world has to first buy US dollars before it buys oil, which creates what I call a structural demand for US dollars around the world. On one hand, a person could argue that oil is bought and sold in US dollars because it is the world’s most desired and valued currency. On the other, it’s really just a means to purchasing an end - oil, so it’s a chicken/egg problem at work.

So now it makes sense why China is announcing that it will dump US dollars: it can buy oil in euros or whatever other currency from Iran.

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