Death of dollar as the world currency
Monday, 3 December 2007
"Here are two brother countries, united like a single fist," declared Venezuelan kingpin Hugo Chavez after meeting Mahmoud Ahmadinejad, president of Iran, in Tehran on Nov 19th.
"We have common viewpoints and we will stand by each other until we capture the high peaks. God is with us and victory is awaiting us," added Ahmadinejad, vowing to defeat US imperialism together and pointing to the fall of the US Dollar as the prelude to the end of America's global dominance.
"Don't you see how the Dollar has been in free-fall without a parachute? The US prints Dollar bills with no real economic foundation. Soon we will not talk about dollars, because the empire of the Dollar is crashing. The day will arrive not only in OPEC, but also in Latin America, when we will be liberated from the Dollar.
Why are Ahmadinejad and Chavez laughing? Oil prices are up 56 per cent this year after nearly reaching $100 per barrel. At the same time, the US Dollar is mired at a 20-year low, with the US economy teetering on the verge of a recession.
The US Dollar has fallen over 50 per cent versus the Euro since 2002, and oil prices are nearly five times higher over the same time period. Increasingly, the US dollar's reserve currency status is looking very fragile. Perhaps, all that's left supporting the greenback is America's military might.
"They get our oil and give us a worthless piece of paper," Ahmadinejad told OPEC ministers in the Saudi capital of Riyadh, insulting the US Dollar. But the more the US Dollar slides, the less foreign investments in the US capital markets are worth, and the more likely that foreigners could withdraw en masse.
If that were to happen, the greenback would collapse.
"The Dollar is losing its status as the world currency," warned Chinese central bank director Xu Jian on Nov 7th. "We will favour stronger currencies over weaker ones, and will readjust accordingly," added Cheng Siwei, vice chairman of China's National People's Congress, signaling plans to diversify Beijing's $1.43 trillion of foreign exchange reserves.
"We have common viewpoints and we will stand by each other until we capture the high peaks. God is with us and victory is awaiting us," added Ahmadinejad, vowing to defeat US imperialism together and pointing to the fall of the US Dollar as the prelude to the end of America's global dominance.
"Don't you see how the Dollar has been in free-fall without a parachute? The US prints Dollar bills with no real economic foundation. Soon we will not talk about dollars, because the empire of the Dollar is crashing. The day will arrive not only in OPEC, but also in Latin America, when we will be liberated from the Dollar.
Why are Ahmadinejad and Chavez laughing? Oil prices are up 56 per cent this year after nearly reaching $100 per barrel. At the same time, the US Dollar is mired at a 20-year low, with the US economy teetering on the verge of a recession.
The US Dollar has fallen over 50 per cent versus the Euro since 2002, and oil prices are nearly five times higher over the same time period. Increasingly, the US dollar's reserve currency status is looking very fragile. Perhaps, all that's left supporting the greenback is America's military might.
"They get our oil and give us a worthless piece of paper," Ahmadinejad told OPEC ministers in the Saudi capital of Riyadh, insulting the US Dollar. But the more the US Dollar slides, the less foreign investments in the US capital markets are worth, and the more likely that foreigners could withdraw en masse.
If that were to happen, the greenback would collapse.
"The Dollar is losing its status as the world currency," warned Chinese central bank director Xu Jian on Nov 7th. "We will favour stronger currencies over weaker ones, and will readjust accordingly," added Cheng Siwei, vice chairman of China's National People's Congress, signaling plans to diversify Beijing's $1.43 trillion of foreign exchange reserves.