Casey Research: Oil’s role in $ as reserve currency breaking down MUST READ

[seraphson]

London Bridge is falling down,
Falling down, falling down.
London Bridge is falling down,
My fair lady.

[Travlyr]

I heard someone saying yesterday on the radio that WHEN CONFIDENCE IN THE DOLLAR DISAPPEARS, it's over.

After all, our entire economy is based on CONFIDENCE, and nothing more.

Keep in mind that is central planned government counterfeiting economy is based on CONFIDENCE. Laissez-faire free market economy does not rely on fiat money. When confidence in the dollar disappears, then hard working effort seeking productive individuals become rich. Honest Sound Money FTW!

[wgadget]

Correct to a point. The dollar is a "safe-haven" because everyone says it is. Oil is a big factor of it, but so is the economy and everythign it entails behind it.

Soon as the faith in the dollar dies, the credit-based economy is over.

I hope they replace it with some kind of SOUND MONEY, as Ron suggests.

[S.Shorland]

Stake out the turf before the battle?

[kathy88]

80% of American voters couldn't get through that article, and if they did would have no idea what they just read. Tweeted and FBed.

[Danke]

tldnr

[Danke]

(The continual erosion of the dollar could well be the tipping point that causes oil prices to skyrocket. But investors who get positioned before that happens could make life-changing gains.)

I know he is a PM guy, but what are the investments he currently recommends?

[Zippyjuan]

For decades the US dollar has been absolutely dominant in international trade, especially in the oil markets. This role has created immense demand for US dollars, and that international demand constitutes a huge part of the dollar's valuation. Not only did the global-currency role add massive value to the dollar, it also created an almost endless pool of demand for US Treasuries as countries around the world sought to maintain stores of petrodollars. The availability of all this credit, denominated in a dollar supported by nothing less than the entirety of global trade, enabled the American federal government to borrow without limit and spend with abandon.

Petroleum producing countries which include

Oil exporters include Ecuador, Venezuela, Indonesia, Bahrain, Iran, Iraq, Kuwait, Oman, Qatar,
Saudi Arabia, the United Arab Emirates, Algeria, Gabon, Libya, and Nigeria.

presently hold $265 billion worth of US debt or 1.8% of total US debt. Last year the US had to borrow about four times that in the form of new debt. Not sure I would qualify that as "an endless pool of demand for US Treasuries" though it does put them as a group the third largest foreign holder of US debt. The list does leave off Canada ($55 billion in Treasury holdings though we buy lots of other things from Candada besides oil too) which is our largest source of imported oil and Mexico with $33.2 billion - our #2 supplier. http://www.treasury.gov/resource-cen...uments/mfh.txt Saudi Arabia, Kuwait and Iraq combined accounted for 18.2% of US oil imports.

Now China has definately been buying US Treasuries (and is the biggest foreign holder of them) to keep their currency weak compared to the dollar- that is to keep the prices of exports to the US artificially low and give them a competitive advantage. If the yuan was allowed to float higher against the dollar, as would naturally occur if China was to convert the dollars and use them to buy something else not denominated in dollars, then the cost of goods from China would go up and it would become more competitive to start producing more of them in the US. This is the flip side of having a strong currency- it encourages more imports, fewer exports and fewer jobs here.

[NoOneButPaul]

It's simply amazing how spot on G. Edward Griffin was in The Creature from Jekyll Island.

Whether it's actually a group of international socialists trying to purposely destroy the currency so we'll lose our national sovernety, or it's simply the result of decades of politicians and banks gone while, the result will still be the same...No more constitution, no more freedom, socialism for the entire globe, and a high tech feudal system for the masses...

[smithtg]

all the casey articles are worth reading. I regularly read them on goldseek.com