Iran presses oil customers to pay in currencies other than dollars

danarhea · 03-28-07, 01:08 AM

The Iranian Oil Bourse is now in operation, and they are demanding that customers pay for oil only in Euros. Iran is cutting its oil reserves in dollars down to 20% of total reserves. Not only that, most of China's purchases are now in Euros. Japanese refiners, who are now paying in dollars, are now indicating a willingness to switch to the yen. In addition, from Al Jazeera, the Gulf states are now dropping the dollar.

Although some of this is in retaliation for the US stance in Iran, that most likely is just an excuse for the real reason. The dollar is no longer worth the paper it is printed on. It is a fiat currency, backed only by debt. Nations around the world see a house of cards about to fall, and they are leaving the dollar like rats from a sinking ship. Get ready for the big ride.

Finally, for your edification, a sometimes humorous, but very true article on what it means to have a fiat currency.

thenextbesthang · 03-28-07, 01:09 AM

yeah, this has been known for a while.

Kandahar · 03-28-07, 01:25 AM

Ahem. The euro is also a "fiat currency." If that was the reason, then they wouldn't be trading in euros either.

The reason the dollar is sliding in value is because of a conscious decision by our government to pursue weak-dollar policies. There's nothing inherently wrong with that; a weak dollar has its advantages, such as a lower trade deficit and lower unemployment.

RightOfCenter · 03-28-07, 01:38 AM

Quote:

Originally Posted by Kandahar

Ahem. The euro is also a "fiat currency." If that was the reason, then they wouldn't be trading in euros either.

The reason the dollar is sliding in value is because of a conscious decision by our government to pursue weak-dollar policies. There's nothing inherently wrong with that; a weak dollar has its advantages, such as a lower trade deficit and lower unemployment.

But the fact that it money is only worth anything because the government says so bothers me.

Kandahar · 03-28-07, 01:42 AM

Quote:

Originally Posted by RightOfCenter

But the fact that it money is only worth anything because the government says so bothers me.

No one is forcing you to own it. If you'd rather buy some gold/silver/Twinkies and lock it in a safe, you can do so.

Even gold-based currency is only worth something because the government says so.

RightOfCenter · 03-28-07, 01:49 AM

Quote:

Originally Posted by Kandahar

No one is forcing you to own it. If you'd rather buy some gold/silver/Twinkies and lock it in a safe, you can do so.

Even gold-based currency is only worth something because the government says so.

People don't let me trade twinkies for other services...

Kandahar · 03-28-07, 01:51 AM

Quote:

Originally Posted by RightOfCenter

People don't let me trade twinkies for other services...

They aren't legally prohibited from doing so. Most people just use government-issued currency because they think it's the most convenient.

RightOfCenter · 03-28-07, 01:52 AM

Quote:

Originally Posted by Kandahar

They aren't legally prohibited from doing so. Most people just use government-issued currency because they think it's the most convenient.

True.

I guess I can only voice my un-informed opinion, I really know very little about economics. Common sense seems to dictate having something concrete behind a currency though.

wonder cow · 03-28-07, 04:34 AM

I have heard for quite a while prophecies of US doom due to others moving away from the US dollar or actively trying to undercut it.

I just don't think it will happen. The US is like the poker player with the big stack and it would take a lot to take down the dollar.

PeteEU · 03-28-07, 05:07 AM

Iran can demand what ever they want in payment for their product. Only issue I see is some hurt USA pride that their currency aint what it use to be.. /shrug