Calling Larry Kudlow: Peters on Iranian Oil and Currency Dangers
There is very real cause for economic concern regarding Iran, and it has less to do with the availability of their oil than most would think.
Did you miss the latest from Alan Peters: Can The USA Avoid Attacking Iran? Can We Attack Successfully?
In this, he posits the dangers of not simply access to Iran's oil, but the currency the world currently uses as the basis for global oil transactions...US Dollars. His scenario is worthy of attention, especially noting that Iran has already changed the currency they use away from dollars. His scenario, in part:
One of the major uses for the Dollar is to pay for oil, which is still bought and sold in Dollars and all other currencies are converted at the ongoing rate of exchange into dollars to finalize payments of transactions. For instance German Deutschmarks have to "become Dollars" to pay for oil, which gives the Dollar a reason to exist as the primary currency of the world.
For example, suddenly, because of Iran's Oil Bourse (and as previously intended by Iraq and some OPEC countries plus Russia), sale of oil is no longer in Dollars but in "pesos", even tiddlywinks, or anything but dollars, then the dollar has less and less reason to be an important currency. Pesos or tiddlywinks rapidly become the prime "form of payment". The world will need tiddlywinks more than dollars and will start buying and using those and sell off the now less useful or even useless dollar.
The drop of the Dollar as a value pulls down all other currencies - far beyond the ability of any country or group of countries or central banks to intervene and prop it up.
All the "useless" dollars crammed inside the banks plummet in value and one country, bank, business after another will discard them ASAP, putting them up for sale and creating a glut of dollars being sold with the consequent drop in value -- simply to try to salvage anything before the value goes so low as to be almost nothing. Again SUPPLY AND DEMAND considerations - not oil, not Euros.
Where is Larry Kudlow?