It’s undeniable that modern economies run on energy and that oil is one of the more useful forms of energy. One of the principal values that still undergirds the value of the U.S. Dollar is the fact that the major Middle East nations still sell oil priced in Dollars.
You might not know that Russia just overtook Saudi Arabia as the world’s largest oil producing nation. Russia is currently the fourth largest supplier of oil to China.
- Nov. 22 (Bloomberg) — China started allowing the yuan to trade against the Russian ruble from today in the interbank market as policy makers promote the currency’s use in global trade and finance.
- The move will help “facilitate bilateral trade between China and Russia and help develop yuan trade settlements,” said a statement published on the website of the China Foreign Exchange Trade System, a subsidiary of the People’s Bank of China.
- China is allowing greater use of its currency for cross- border transactions to reduce reliance on the U.S. dollar, after Premier Wen Jiabao said in March he is “worried” about holdings of assets denominated in the greenback.
At this link are some interesting rumblings from 2003, and here from 2006. Here is a report from 2008 claiming that “Until 2002 the North Sea was the biggest source of oil for Europe, but since then the Former Soviet Union (FSU), and in particular Russia, has become this region’s largest source of oil imports.”
Here is another report from 2009 explaining the impact on gold of the coming end of dollar-based oil trading:
- TOKYO (MarketWatch) — Growing speculation over the potential end to dollar-based trading in the oil market may be part of the reason gold prices have rallied beyond $1,020 an ounce to stand near their highest level in 18 months.
- Gulf Arab states, along with China, Russia, Japan and France, are planning to put an end to dollar-based trading in the oil market, according to an exclusive report published Tuesday in the U.K. by The Independent.
The signs are all there, all we have to do is read them. Printing up a few hundred Billion new dollars, or even a few $Trillion, will not save us. The only way to save the dollar is through federal fiscal restraint and (again, largely federal) re-enabling of productive economic activity right here in the good ole USA. Imagine…