Iran Vs. America - Round Two

[Old Timer]

This is a partial clip from Econbrowser on the IOB:

The internet can be a good source of information about issues that aren't adequately covered by the mainstream media. It can also be a font of considerable kookiness.

Tyler Cowen as well as several Econbrowser readers have called attention to Iranian intentions of creating an exchange in which oil would be traded for euros rather than dollars.

Where shall I begin? Well, for starters, you don't need to acquire any U.S. assets in order to purchase a barrel of oil that is priced in dollars. You could pay with eurodollars, which are dollar-denominated accounts that could be issued by any bank anywhere in the world.

And even if the oil were purchased with dollars drawn on a U.S. bank, there is no reason at all that the seller needs to retain the proceeds in that form. Those selling oil could convert those dollars back to euros or Japanese yen or whatever their hearts desired, and likewise could convert euros obtained through sales on an Iranian bourse back into dollars, if they wished. What ultimately determines the demand for dollars is not the unit of account for the transaction, but rather the desired asset holdings of those who are accumulating the wealth.

You could buy gold right now in New York for dollars or in London for pounds. Which one is cheaper? Guess what-- you'll pay exactly the same price either place once you make the currency conversion at the current exchange rate. The same will surely hold for crude oil.

And the notion that the U.S. dollar is currently "backed by oil" is so nonsensical that it is difficult even to fathom what that phrase is intended to convey. When we say that under a gold standard, the dollar is backed by gold, I know exactly what that means-- it means you can surrender dollars at any time to obtain a fixed amount of gold promised by the government. But if you surrender dollars on any given day in January 2006, how much oil are you going to get back? It varies literally by the minute, and the rate at which dollars get exchanged for oil has nothing to do with the promises made by any government and everything to do with market fluctuations in supply and demand.

Which is also my explanation for the prevalence of these theories on the internet-- there is a demand for a deeply conspiratorial interpretation of world events, and always someone willing to supply such.

[Christ's Free Servant]

Old Timer,

Thank you so much for sharing those thoughts.

[Christ's Free Servant]

Smalcald,

Thank you, too, for giving your input. It helps to hear differing views on this subject so that we can weigh all sides of the issue against one another before coming to our own conclusions. No arguing. No need to prove that one person is right and another is wrong. Just a friendly discussion on the varied ways of looking at the topic at hand. I like that! It gives a more balanced approach to the subject. And, it helps me to hear it from different angles. I need a "Dummy 101" course in economics, so all of these comments are helping me to understand a little bit better.

[justme7]

this is all very interesting. my knowledge of economical affairs is smaller than small for the most part. whatever happens and however it happens, i know for certain that this world is headed for trouble. when the oil hits the fan so to speak, i pray that we as believers are girded up and can see the lines clearly drawn. i plan to keep my eyes open. i don't think i could figure all of this out if i tried with all i've got. but, i know for sure that the LORD has got is and us covered. hallelujauh!!! the thing that most interests me is that either way we go, it would seem as though by some means or another America will experience depression level devistation. whatever happens the LORD's hands are more than capable i know. i appreciate the fact that there are believers on the watchtower looking out and reporting what they see.

thanx for the interesting info.

amber

[Christ's Free Servant]

this is all very interesting. my knowledge of economical affairs is smaller than small for the most part. whatever happens and however it happens, i know for certain that this world is headed for trouble. when the oil hits the fan so to speak, i pray that we as believers are girded up and can see the lines clearly drawn. i plan to keep my eyes open. i don't think i could figure all of this out if i tried with all i've got. but, i know for sure that the LORD has got is and us covered. hallelujauh!!! the thing that most interests me is that either way we go, it would seem as though by some means or another America will experience depression level devistation. whatever happens the LORD's hands are more than capable i know. i appreciate the fact that there are believers on the watchtower looking out and reporting what they see.

thanx for the interesting info.

amber

Amber,

I agree with you. Tough days are ahead, but God is in control. No matter what happens, look up to God and know that all this happened by his design and for his purpose and that this is all fulfillment of prophecy and that means we are that much closer to Christ's return. Read Psalm 91 and be encouraged that God will keep us under his feathers.

[Christ's Free Servant]

There is someone on here who is using really filthy language. How did that get through? I am closing this topic, since there is another one out there just like it and because I do not want to read anymore of this language.