Iran Oil Bourse opens 3/20; Fed stops publishing M3 3/23; dollar collapse?

[StefanX]

The Proposed Iranian Oil Bourse
The proposed Iranian Oil Bourse will accelerate the fall of the American Empire.
http://www.informationclearinghouse.info/article11613.htm

The Iranian government has finally developed the ultimate "nuclear" weapon that can swiftly destroy the financial system underpinning the American Empire. That weapon is the Iranian Oil Bourse slated to open in March 2006. It will be based on a euro-oil-trading mechanism that naturally implies payment for oil in Euro. In economic terms, this represents a much greater threat to the hegemony of the dollar.
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Should the Iranian Oil Bourse gain momentum, it will be eagerly embraced by major economic powers and will precipitate the demise of the dollar. The collapsing dollar will dramatically accelerate U.S. inflation and will pressure upward U.S. long-term interest rates. At this point, the Fed will find itself between Scylla and Charybdis - between deflation and hyperinflation - it will be forced fast either to take its "classical medicine" by deflating, whereby it raises interest rates, thus inducing a major economic depression, a collapse in real estate, and an implosion in bond, stock, and derivative markets, with a total financial collapse, or alternatively, to take the Weimar way out by inflating.
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There are plenty of experts who predict some pretty scary things, the least of which is a massive destabilization of the American economy.
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Of course most of the saber-rattling is over Iran's nuclear program and the word "bourse" is never mentioned.
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Only time will tell whether regime change is in the cards for Iran, especially at the hands of the United States. But the Fed's quiet decision to no longer print the M3 is definitely quite ominous.


A Story About Oil You NEED To Hear
http://www.dailykos.com/storyonly/2005/12/27/115725/53

Some news stories are screamed in 100 headlines in 100 different newspapers and media outlets. This one however is so quiet it's almost a whisper, yet it may be one of the biggest stories next year.
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"On March 23, 2006, the Board of Governors of the Federal Reserve System will cease publication of the M3 monetary aggregate."
-- http://www.federalreserve.gov/releases/h6/discm3.htm

The world sells and buys billions of barrels of oil per day, and every single one of those billions is in the form of an American dollar. The effect of this is that every single country in the world which holds large reserves of dollars (for the purpose of buying oil) is essentially propping up the American economy on a huge scale.
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Should Iran's oil bourse be successful and sales be denominated in Euros, this will induce hedging of the Euro versus the dollar and fundamentally alter the prices of oil. Some reports show that both China and Russia, large trading partners with Iran, have begun to increasing their holdings of Euros.

[unblock]

1. i think the cries of "collapse" as vastly overstated

but then, nearly all MY investment money is now overseas....

it's more that i expect a gradual decline, at least until a democrat is elected....

[StefanX]

3. You're right -- it depends on what the meaning of "collapse" is

It could be argued that the dollar has been slowly "collapsing" over the past few years. What percent has it devalued against the Euro or against gold lately? I don't have exact figures at my fingertips -- but the dollar has probably lost around 20-30% of its value in the last few years. In some people's book that qualifies as a "collapse".

I always believed that Bush started the war against Iraq because Saddam tried to start selling oil for Euros instead of Dollars around 2000. It was the explanation that made the most sense.

And now Iran is about to do the same thing -- and again we hear Washington talking about about Iran's nukes. And now the Fed is going to stop publishing the M3 -- making it very hard to total up all the dollars in circulation worldwide.

It doesn't look good for the US Dollar.

[AzDar]

2. I believe in the validity of the theory...my question is, how does the

average family protect itself from this disaster in a practical manner? Or DOES it?

[StefanX]

5. I don't know

Maybe it's actually better to have lots of (dollar-denominated) debts -- because if the dollar is worth less, these debts become smaller.

(Maybe this is a deliberate strategy on the part of Washington -- which has some pretty big dollar-denominated debts.)

Economists are talking about deflation and hyperinflation -- both scenarios don't look very rosy for the average working family.

[unblock]

6. dollar debt and foreign currency assets would be best

but of course this is risky, as are most currency-based bets. you take not only the investment risk but also the currency risk.

[Vincardog]

7. The average family better get debt free and live as close to the land as

possible. Grow as much of your own food as you can. Barter for the rest.

[JeffR]

4. See also

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=103x189071

[cliss]

8. Or: "High anxiety in Washington"

Here's what I read about Saddam before we barreled into Iraq: in 2001, Saddam started dealing in Petro-Euro's. Prior to that, he had been using (as the rest of the world) in Petrodollars.

He didn't completely switch over. But after his first year of trading in Euros, he made a profit of $455 million dollars. Very profitable!! As the U.S. was fuming, Saddam laughed....for a while...
===============

Now as far as Iran switching over to Euros, it probably won't be that easy. First of all, Iran has more oil output. They are the #2 producer in OPEC next to Saudi Arabia. Europe will fight this development. You can already tell, they are parroting the U.S. intentions. Especially the German chancellor.

But that makes Iran the gorilla in the living room. They are unbelivably powerful right now. They are sitting on possibly the world's #1 oil reserve. They can cut us off and just sell to China and India if they want. The U.S. and Europe are in dire straits, indeed. And really, no matter what happens, they will still be sitting on that vast pool of oil.

The U.S. is trapped. They can't bomb Iran because it will screw up the oil shipments. We don't have enough people to march in and "take" the place. We're running out of money to fund these wars. Public opinion is spiraling downward.

Really, the only card we have is to pressure Europe, pressure countries, pressure the U.N, pressure everybody. We sure as hell don't have much to back it up with, though.

[Left Below]

9. The dollar has been the strongest currency in the world

for years precisely because it is stable.

But inflation is like diabetes, it ravages its host from within. When the double whammy of easy Fed money and foreign divestiture kicks in with inflationary pressure things will get ugly - bourse or not.

The deficit adds to the pile-up. The Bush people have de-coupled their $10 trillion tax cut from the $10 trillion needed to make SS solvent over the same time period.

If the stupid American electorate knew that SS was being lynched to make the tax cut permanent they would revolt against the GOP in record numbers.

Except the brain-dead fundies, of course.