7 Countries Considering Abandoning the US Dollar (and what it means)

first the deliberate economic collapse, then comes the tyranny...

this will surely keep us safe from the freedom hating muslims...


7 Countries Considering Abandoning the US Dollar (and what it means) [align=left] Jessica Hupp
Currency Trading.net
Saturday November 10, 2007[/align]
Itâ??s no secret that the dollar is on a downward spiral. Its value is dropping, and the Fed isnâ??t doing a whole lot to change that. As a result, a number of countries are considering a shift away from the dollar to preserve their assets. These are seven of the countries currently considering a move from the dollar, and how theyâ??ll have an effect on its value and the US economy.

1. Saudi Arabia: The Telegraph reports that for the first time, Saudi Arabia has refused to cut interest rates along with the US Federal Reserve. This is seen as a signal that a break from the dollar currency peg is imminent. The kingdom is taking â??appropriate measuresâ?� to protect itself from letting the dollar cause problems for their own economy. Theyâ??re concerned about the threat of inflation and donâ??t want to deal with â??recessionary conditionsâ?� in the US. Hans Redeker of BNP Paribas believes this creates a â??very dangerous situation for the dollar,â?� as Saudi Arabia alone has management of $800 billion. Experts fear that a break from the dollar in Saudi Arabia could set off a â??stampedeâ?� from the dollar in the Middle East, a region that manages $3,500 billion.
2. South Korea: In 2005, Korea announced its intention to shift its investments to currencies of countries other than the US. Although theyâ??re simply making plans to diversify for the future, that doesnâ??t mean a large dollar drop isnâ??t in the works. There are whispers that the Bank of Korea is planning on selling $1 billion US bonds in the near future, after a $100 million sale this past August.
3. China: After already dropping the dollar peg in 2005, China has more trouble up its sleeve. Currently, China is threatening a â??nuclear optionâ?� of huge dollar liquidation in response to possible trade sanctions intended to force a yuan revaluation. Although China â??doesnâ??t want any undesirable phenomenon in the global financial order,â?� their large sum of US dollars does serve as a â??bargaining chip.â?� As weâ??ve noted in the past, China has the power to take the wind out of the dollar.
   
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4. Venezuela: Venezuela holds little loyalty to the dollar. In fact, theyâ??ve shown overt disapproval, choosing to establish barter deals for oil. These barter deals, established under Hugo Chavez, allow Venezuela to trade oil with 12 Latin American countries and Cuba without using the dollar, shorting the US its usual subsidy. Chavez is not shy about this decision, and has publicly encouraged others to adopt similar arrangements. In 2000, Chavez recommended to OPEC that they â??take advantage of high-tech electronic barter and bi-lateral exchanges of its oil with its developing country customers,â?� or in other words, stop using the dollar, or even the euro, for oil transactions. In September, Chavez instructed Venezuelaâ??s state oil company Petroleos de Venezuela SA to change its dollar investments to euros and other currencies in order to mitigate risk.
5. Sudan: Sudan is, once again, planning to convert its dollar holdings to the euro and other currencies. Additionally, theyâ??ve recommended to commercial banks, government departments, and private businesses to do the same. In 1997, the Central Bank of Sudan made a similar recommendation in reaction to US sactions from former President Clinton, but the implementation failed. This time around, 31 Sudanese companies have become subject to sanctions, preventing them from doing trade or financial transactions with the US. Officially, the sanctions are reported to have little effect, but there are indications that the economy is suffering due to these restrictions. A decision to move Sudan away from the dollar is intended to allow the country to work around these sanctions as well as any implemented in the future. However, a Khartoum committee recently concluded that proposals for a reduced dependence on the dollar are â??not feasible.â?� Regardless, it is clear that Sudanâ??s intent is to attempt a break from the dollar in the future.
6. Iran: Iran is perhaps the most likely candidate for an imminent abandonment of the dollar. Recently, Iran requested that its shipments to Japan be traded for yen instead of dollars. Further, Iran has plans in the works to create an open commodity exchange called the Iran Oil Bourse. This exchange would make it possible to trade oil and gas in non-dollar currencies, the euro in particular. Athough the oil bourse has missed at least three of its announced opening dates, it serves to make clear Iranâ??s intentions for the dollar. As of October 2007, Iran receives non-dollar currencies for 85% of its oil exports, and has plans to move the remaining 15% to currencies like the United Arab Emirates dirham.
7. Russia: Iran is not alone in its desire to establish an alternative to trading oil and other commodities in dollars. In 2006, Russian President Vladmir Putin expressed interest in establishing a Russian stock exchange which would allow â??oil, gas, and other goods to be paid for in Roubles.â?� Russiaâ??s intentions are no secretâ??in the past, theyâ??ve made it clear that theyâ??re wary of holding too many dollar reserves. In 2004, Russian central bank First Deputy Chairmain Alexei Ulyukayev remarked, â??Most of our reserves are in dollars, and thatâ??s a cause for concern.â?� He went on to explain that, after considering the dollarâ??s rate against the euro, Russia is â??discussing the possibility of changing the reserve structure.â?� Then in 2005, Russia put an end to its dollar peg, opting instead to move towards a euro alignment. Theyâ??ve discussed pricing oil in euros, a move that could provide a large shift away from the dollar and towards the euro, as Russia is the worldâ??s second-largest oil exporter.

What does this all mean?
Countries are growing weary of losing money on the falling dollar. Many of them want to protect their financial interests, and a number of them want to end the US oversight that comes with using the dollar. Although itâ??s not clear how many of these countries will actually follow through on an abandonment of the dollar, it is clear that its status as a world currency is in trouble.
Obviously, an abandonment of the dollar is bad news for the currency. Simply put, as demand lessens, its value drops. Additionally, the revenue generated from the use of the dollar will be sorely missed if itâ??s lost. The dollarâ??s status as a cheaply-produced US export is a vital part of our economy. Losing this status could rock the financial lives of both Americans and the worldwide economy.

gets scarier every day ... but, could be a good thing for me, I'm already broke, and this could bring everyone down to my level ! .. Success at last !! :S2:

Haha exactly, better reason to spend all your money on weed.

I'm rather enjoying my Canadian dollar being at a record $1.10 US:jointsmile:. lol, we have 10% their populaiton size and a roughly equivilantly sized economy. Shouldn't Bush's "middle-class tax cuts" and sound fiscal policy be causing the US economy to soar far beyond your friendly but backwards neighbors?:jointsmile:

Now if only the businesses would hurry up and stop charging Canadian prices based on a dollar that's 75 cents American! At least the book stores, under public pressure, have started charging prices equivilant to the American dollar. In case you Americans didn't know, Canadians pay $30 for a US$20 book.

But then.... how could we possibly have such a strong economy under our filthy socialist ways?:D

(this is why I'm a proponent of balance between socialist and capitalist systems).

When I was in Florida, 10 years ago, I kept this dollar bill as a souvenir (don't tell customs). It said, "whoever finds this note please write the message on ten other bills and it'll bring good luck." So I thought, haha fuck your stupid dumb ass capitalist superstition I'm going to keep this as a souvenir of my anarchist ideals, a sort of finger up the ass of materiality and personal symbol of how much I disvalue monetary accrument as a form of status and, more importantly, spec-ial longevity. Now this news today is starting to make me feel guilty, and burdened with some negative karmic energy, so i want to give it back to the land from whence it came. I'm going to post it to some random address in America I'm going to pull off the internet (I really am, I think, but I don't know because I'm on the crazy liquor tonight) Maybe you can give it to some homeless guy, it's probably going to be worth at least 1 cup of coffee in starbucks soon, that'll keep one of you warm for an hour or two when interdependance day comes.

Given the current state of the US economy and all the upset caused by the whole mortgage fiasco it isn't suprising that the dollar is taking a hammering from other currencies.

Its just paper anyway. I personally believe that the only way for this country to regain fiscal responsibility is to just have the economy collapse and rebuild it on sound fiscal policies. Like quit printing worthless paper with nothing backing it and quit borrowing money from corrupt banks and foreign nations.

Not to sound too extremist, but this is yet another sign of the decline of the "american empire". With bush in my (and probably most everyone on this site) opinion driving the country straight down into the ground and the incredibly backwards mentality of many americans (hey they voted for him didn't they?) this was to be expected, it actually is coming on faster than I would have imagined...

Well...it was sweet while it lasted.....:thumbsup:.....$$$$$$$$$$$$$$$$$$

Quote:

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Originally Posted by Gandalf_The_Grey

But then.... how could we possibly have such a strong economy under our filthy socialist ways?:D

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Ha! :jointsmile:

Quote:

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Originally Posted by Gandalf_The_Grey

I'm rather enjoying my Canadian dollar being at a record $1.10 US:jointsmile:. lol, we have 10% their populaiton size and a roughly equivilantly sized economy. Shouldn't Bush's "middle-class tax cuts" and sound fiscal policy be causing the US economy to soar far beyond your friendly but backwards neighbors?:jointsmile:

Now if only the businesses would hurry up and stop charging Canadian prices based on a dollar that's 75 cents American! At least the book stores, under public pressure, have started charging prices equivilant to the American dollar. In case you Americans didn't know, Canadians pay $30 for a US$20 book.

But then.... how could we possibly have such a strong economy under our filthy socialist ways?:D

(this is why I'm a proponent of balance between socialist and capitalist systems).

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Canadians = Filthy Socialists!!! :D