Charles Edison

"Economics, politics, and personalities are often inseparable." - Charles Edison

Wednesday, February 15, 2012

Iranian Oil & Petrodollar Warfare

The US has another potential economic crisis on its hands. This article claims that Iran is continuing it's "attack" on the dollar, when in actuality the Islamic Republic is merely protecting itself from one commenter called "America's super-imperialism." To have a better understanding of the Petrodollar situation and what Iran is doing to leave America quivering, I suggest reading this wiki article.

The Petrodollar refers to the OPEC recognized standard of using only the US dollar "as the world's dominant reserve currency, and the currency in which oil is priced." Now picture every country that imports or exports oil keeping X amount of dollars in a backroom somewhere for Y years. Since most countries rely on importing oil, they will constantly reserve and demand the dollar. This is one of the reasons we can function as a country despite the debt we find ourselves in. All is well, right? Now imagine a majority of foreign countries switching their petrodollar to the petroeuro. There lies a potential for billions of dollars to be deemed useless, worthless. The countries that adopted the new petrocurrency now have no use for the dollar, and can freely sell their bonds, securities, assets, etc., resulting in a sudden flood of US money in the world economy and unprecedented inflation. Game over.

Iran is the first country succeeding at their fight against the petrodollar, and that worries the United States. "Supposedly" the US and friends are merely placing sanctions on the Islamic Republic to coerce them out of pursuing WMDs, but protecting the petrodollar's regime is first priority. We could face the truth: it's unlikely Iran would ever initialize warfare against Israel. They would face utter annihilation. It's also unlikely the US could go to war with Iran given the American public's awakening in the face of media manipulation. We've become much more conscious of the media's bias and its ability to sway public opinion. Perhaps the only way for the US to continue to dominate the oil trade is to utilize Israel to deliver the first attack, then to follow through with the aforementioned 'utter annihilation.'

This article radically shifted my position on "who's the bad guy here" from a "clearly, them" to "nope, us." First off, how is it an attack if Iran is merely wanting to trade natural resources with India? Is it seen as an attack just because of the looming economic threat? If I attempted to sympathize with Ahmadinejad, I would see an otherwise disillusioned man who ultimately wants to protect his people from what they view as capitalist greed and monopoly.

I do worry about the looming future. As justified as it may be, Iran is breaking OPEC regulations by trading in any medium outside the US dollar, which in itself could cause a monumental backlash not just from the United States, but also the OPEC-member countries. In 2000, Saddam Hussein tried to break away from the petrodollar as well. I predict a parallel future for Iran.

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