(Thank you George for emailing this to Recaps.)
UU8044 - “Death of the Petro Dollar” by mnt goat
I come to you today to give you a quick update on the progress of the new government and how this relates towards the international rollout of the IQD for Iraq.
Today's news letter, as in all my news letters, is a continuation of the ongoing saga of the IQD RV process. Please refer back to my news letter of 9/13 (LINK) as this news letter is a continuation of this news.
Today is Tuesday 9/16 and this week Iraq needed to vote on the remaining 6 ministers that were placed as “proxy” ministers for the initial confirmation voting process by parliament last week. Again today we witnessed a vote on the permanent replacements for these ministers.
The House of Representatives ended its meeting held this afternoon after the non-approval (rejection) on candidates of the Ministries of Defense , Interior and Tourism as presented by Abadi.
So 3 of the 6 ministers are still not permanently seated. Two of these are critical ministers for Iraq and must be seated. Are we going to experience what we saw from the 2010 election all over again? Remember the minister of Defense, Security and the Interior remaining in proxy positions throughout the total 4 years of Mailiki’s GOI.
Parliament is scheduled to vote again on the replacement candidates in a couple days from now or next Thursday 9/18.
Budget Update –
Parliament was supposed to do a first reading for the proposed contingent budget for the remaining of the year 2014. It too did not happen today since the budget was not yet forwarded from the GOI to parliament in time for the session. I am telling you again as I have said this many times already – we will not see any finality in this next budget until the RV is completed and they have a new international rate to their currency. They will continue to still until that time.
Petro-Dollar Lives On
There is much talk too that the Petro-dollar is dead. How is this effecting the IQD RV? Will it ever die?
Many have been looking down the wrong rat holes for clues as to why this hold up on the revaluation of Iraq’s currency and bringing it back to an international status. One only has to look at the real reason why the USA invasion happened in the first place to understand when it will be restored.
I believe there is some significance to these statements about the dead petro-dollar however I want you to look at it this way too. First fact is that the USA is not going to lay down and give in that easily. Not when they took the lead in the coalition for 2 gulf wars and spent countless billions in the effort. Using USD for oil purchased creates a huge demand for the currency and inflates it’s value.
Remember there is no real tangible increase in assets backing it on an oil sale other than the forced use of it, thus artificially creating a demand for it, thus rising the value. Supply and Demand – simple macro economics. Do you remember this from your economic class? This in part has been shoring up the value of the USD and keeping a major crash from occurring since the USA seems to be overspending and constantly borrowing money to run its government. How long can this continue?
So the issue is not whether the Petro-dollar will go away. The real issue is how can they prevent the downfall of the Petro-dollar without crashing the USA economy?
This issue with Syria, Russians in Ukraine, now ISIS and the reason USA invaded Iraq in the first place is all about maintaining the Petro-dollar. It always was and will continue to be. Saddam and then Maliki did not support the Petro-dollar and wanted to trade oil for the country of origins own currency. We know Saddam was supported and placed in Iraq solely for this purpose by the USA. We read article after article of Maliki’s deals with Russia and India over oil purchases and how he too wanted to circumvent the Petro-dollar. This is why he too had to go. I will pose some questions for you to think about.
How did using USD for oil all begin? There is no logical reason as to why not to accept other foreign currencies for oil other than knowing a bit of history behind it. The currency standard of using the USD for purchasing oil was needed during the great depression. At this timeframe the USA was the most stable of all the countries and so the USD was agreed to by the world leaders to be used in place of gold as the medium of exchange. Kind of like an I.O.U.
So the USA was weaned on this artificial demand (like a mother's tit) for its currency and like a baby getting used to being fed, the USA got used to these added benefits on its currency. These demands soon became a dependency and hard to give this up, especially in hard times like the world’s economies are now experiencing.