The Euro vs Dollar Conspiracy Theory: part II - "The P

[Huck]

Re: The Euro vs Dollar Conspiracy Theory: part II - "T

I think you are right Toro, but we have lost the main focus. The scary part of the american lies elsewhere, in the hegemony itself. It is not the USA the problem, but how the world percieves and needs the US dollar.

I will post in a few minutes...

 

[Huck]

Re: The Euro vs Dollar Conspiracy Theory: part II - "T

OK, hello everyone!

For the last few days, there has been a very interesting discussion going on as to if the threat of the euro as an oil currency truly can be a threat to the USA economy or not. A lot has been said on both sides and everyone has made strong cases. This is going to be a long thread and will most certainly not be for the faint of heart. This is to be a mature and civilized thread, so please avoid partisan flaming.


So, my goal is now for us to focus on the problem and acknowledge facts as we move ahead, to make the solution stand out. It is the first step before making a full fledged model.

Here is how we will proceed: I will post facts and only facts about the world economy. Every fact will have to be traceable to a trusted source, such as wikipedia or well trusted sources. As I present them, we will have to acknowledge these facts together before we can move on. If I forget anything, you are free to post them so that we can consider them and add them is agreed upon. No opinion or editorial letters found on the web will be accepted, we want facts and only facts. We will also try to focus on the main goal, as it is very easy to get lost in side tracks that in all may not be relevant to the main goal.

Economics is not an exact science and some variables may remain. Certain facts may also be argued for a reasonable amount of time. If no agreement occurs, it will them be made a variable. Variables will be clearly marked as so and will be used to branch scenarios. As we move along, these scenarios will try to mark a tendency, where we should be good enough to pull conclusions.


So, here is the goal of the discussion:

We want to know if the fact the USA being the world reserve currency provides it any enviable advantage. Also, we want to know if a threat of a switch to the euro by OPEC countries could be a significant menace to the USA’s economy. (note that for the rest of the discussion, we will refer to the euro as it is the main contender, but it could just as easily be replaced by other powerful currencies such as the yen, the dinar and soon the yuan)

We will also try to avoid discussion on war for the moment and concentrate on the demonstration with facts. Once a conclusion is reached, we can then extrapolate conclusions on US foreign policy.

“Que les jeux commencent!!!” 

 

[Huck]

Re: The Euro vs Dollar Conspiracy Theory: part II - "T

OK, I will here explain the basic concepts that will be relevant to the rest of discussion.

The dollar hegemony:

After WWII , the United Nations Monetary and Financial Conference generated the Bretton Woods Agreements which set up new rules and conventions for international money trade. Among other things, it was decided that the ‘oil’ commodity would be transacted on in American dollars (USD). It was also decided that the world bank AND the International Money Fund (IMF) would perform all loans in USD. From then on, all loans awarded to countries and oil transactions were defined in American dollars.

http://en.wikipedia.org/wiki/Bretton_Woods_system
http://en.wikipedia.org/wiki/World_Bank
http://en.wikipedia.org/wiki/IMF

Now, what does buying something benchmarked in USD imply? Here is an example:

Canadians must buy in Canadian dollars as this is how we earn our money. But, the CAD may not have the parity with the USD, so there is a conversion loss when transacting in a foreign currency. Canadians know this mechanism well as when we buy in the states, something that costs 10$ USD, will cost us 11.30$ CAD. So, for an equal salary, we have a disadvantage with the US buyers. Even worse, if the CAD value fluctuates, like when it was at 63 cents, then it would cost us even more!! This concept also applies to loan repayment. If Canada has a loan from the world bank for 1000$ US (hypothetical number), well it will not cost us 1000$, but rather 1152 $ CAD, we need to work more to repay it!

So, to avoid the conversion cost, what countries may do is accumulate American dollars instead. So, when we repay our debt, we can repay 1000$ USD, no matter the exchange rate of the Canadian dollar. To get American dollars, a country must sell goods to the USA, and get paid in USD (because the USA are the ones printing the US dollars).

Now, lets talk about oil:

Oil is currently THE most important commodity. Why is that? Because oil is not only an important commodity by itself, but is also essential to the well being of ALL the economy of a country. If oil rarifies, then the prices of everything go up and the economy suffers. Canadians know this well when oil price went up last summer. The result was that taxi fares went up, bus passes went up, air travel increased, some foods increased, etc. Other companies such as UPS, fedex, post Canada, etc. who are dependent on trucking and transport also reduced their profit margins. If the impact is too big, economy suffers greatly. Oil is also used to make plastics, pesticides (which affect food), and other materials. In short, oil is everywhere in the economy, and this is why world countries want it so bad and continue buying it.

The OPEC is a regroupment of oil selling countries. A country that sells oil is the one to decide in which currency it will benchmark its oil. For now, almost all oil producing countries benchmark in dollars, to the advantage of the US. (we will see later how it complexifies)

http://en.wikipedia.org/wiki/OPEC

So, as countries need oil, they must buy it from the oil producing countries (not all OPEC). But, we must remember that the oil producing countries sell their oil in US dollars. So, following the conversion logic stated above, it is disadvantageous to pay for it in a negative conversion currency such as the CAD. So again, countries stock up on US dollars so that when they buy oil, they can pay for it in USD.

What this means is that every country in the world, stocks up American dollars (called reserves) and the USD now makes up around 70% of all world currency reserves. It is then said that the US dollar is the main reserve currency.

So, to stock up on US dollars, countries must rush to make goods and export them to the US and get US dollars, but the US, they can print the money as much as they want (relative to import offer). This means that they get stuff for free. In any normal country, printing too much money will dilute its value and create inflation, people will refuse to buy it, it is why it self regulates. But the USA can print a whole bunch to match the imports and every country just will keep buying it by selling more goods, because they need it to buy important commodities and regulate their own domestic currency exchange rates and economies. Here is an example:

If Canada wants US dollars to buy important oil and repay loans, it must sell, say maple syrup to the Americans. Obviously, someone must work for this maple syrup. The Americans, they can make up the money they give and buy your goods. So, you give hard earned maple syrup and get USD, but the Americans, they basically got it for free.

The Americans are not in such as need to acquire foreign currency since the USD is the currency to have in the world anyways, so the export much less than other countries do. Anyways, for most currencies in the world, it is not advantageous to buy stuff in USD again because of conversion, so they buy less USA exports than they are willing to export. It is basically a rush for the American dollar. This creates an immense USA trade deficit that is up to 60% the exports.

It can be seen here:

http://www.census.gov/indicator/www/ustrade.html


This mechanism of US dollar dominance is called the dollar hegemony. The rush for every country to get US dollars give the US a big advantage as they basically get a free and massive subsidy from the rest of the world. This is why the US can get so big, because they receive so much money without having to be accountable for the production. Their dollar is also perpetually supported by the rest of the world, as no one wants to see it fall and devaluate their reserves. Countries also value their own currency with their US reserves, so they have more reasons to stock up on it. This system is key to the comprehension of the rest of the matter.

http://en.wikipedia.org/wiki/Dollar_hegemony
http://en.wikipedia.org/wiki/Currency_reserves
http://en.wikipedia.org/wiki/Reserve_currency

This mechanism also allows the USA to continue borrowing money, since its dollar is so strong. and securities continue to be bought. The debt keeps rising, but there is no rush to repay it, anyways the world keeps wanting US dollars and will still work for it. World banks then keep lending money that is never requested as long as this mechanism continues.

http://en.wikipedia.org/wiki/U.S._public_debt



Ok, up to this point, I want to verify if everyone agrees with me? I may have forgotten stuff or got stuff wrong, so don’t hesitate to help me clarify it all. Also, statements you add must be provable.

Comments up to now?

 

[Huck]

Re: The Euro vs Dollar Conspiracy Theory: part II - "T

Toro: i have read the numbers you posted and they are very interrsting. But for now, lets ignore the US economy and if the hegemony will crash the USA, and rather begin by focussing on finding IF the US economy and reserve currency status have any visible correlation. We can move to the economy form there after.

 

[darkbeaver]

RE: The Euro vs Dollar Co

Please continue along on your way don,t be sidetracked, I want the complete picture without the Imperial interuptions.

 

[Huck]

Re: RE: The Euro vs Dollar Co

Please continue along on your way don,t be sidetracked, I want the complete picture without the Imperial interuptions.

Id love to, but its important that we all agree on the facts before i continue. Its the point of the scientific process.

Once a conclusion is made, i will aggregate them in a final and definitive post to be used as reference for further use.


thanks for your interrest!

 

[darkbeaver]

RE: The Euro vs Dollar Co

O/K so far I agree with your facts,and the process you advocate, I will halt the invasion temporarily awaiting the outcome of deliberations.

 

[Huck]

Re: The Euro vs Dollar Conspiracy Theory: part II - "T

Ok, Since i get no response, i assume facts are good. You can correct me alter if something was forgotten.

now,

From here, we are not too far off from proving the correlation we wanted. If we agree on that the facts I stated in the last main post are right, then we agree that the USA get an immense amount of money from their reserve currency status.


Now, lets clarify this process:


First, lets give an example of a trade deficit. Suppose that you go to work and earn 100$ in your day. Well, if you go to the store, obviously you can spend up to a 100%, so you must run a trade surplus, or at worst equality (unless you can borrow, because the lenders know you will be good for it. But, the deficit must not be too great, or the trust bond will be broken and free fall will begin). But the USA, by importing more than they sell, means that even if they earn 100$, they actually spend 160$ at the store to buy. Obviously, this does not make sense. But, it works if the USA can make up out of thin air the missing 60$ (they can also get massive loans due to dollar credibility). This will work if the rest of the world agrees that this new 60$ has a value. Reserve currency status clearly provides this advantage.

http://en.wikipedia.org/wiki/Trade_deficit

Now, we are already pretty close. By now, it is obvious that the reserve currency status provides a great advantage to the USA.

The Euro:

Since the Bretton Woods agreement, the USA has been getting increasingly rich on the back of the rest of the world. Obviously, this made the ones that understood the process extremely jealous. So, the European nations have decided to unite and create a new currency that would potentially steal some shares of the currency reserve, and at best, replace it. In short, it means that the Europeans want a share of the free money pie.

http://en.wikipedia.org/wiki/Euro
http://en.wikipedia.org/wiki/Eurodollars
http://en.wikipedia.org/wiki/Petrodollars


So, what would happen if the US were to lose their reserve currency status? The rest of the world that were stocking dollars would begin to convert their USD to euros to match the new reserve and avoid devaluation of their currency. Or, they could begin seeking goods from the united states and flood the US with the 3 trillion dollars of reserve money for goods (united states would have to export). But remember, the USA is in trade deficit, and to produce goods for the planet, not selling that much to the USA anymore would have to transform into a trade surplus. (lets not talk about the American economy now, let’s stay focused). And from there, the Europeans would be the ones getting to import a lot of goods in exchange of procuring the world with euros generated out of thin air.

So, at this moment, we already prove that the reserve currency status of the USA is an important factor in their current economy and a switch to the euro would destabilize their current system and force changes (what ever they are, positive or negative, lets agree on “changes” for now). And it is for this reason why the Europeans want the euro to become a reserve currency. It is also obvious that other countries such as Europe have a massive interest in getting their currency to become a reserve, for all the advantages we stated above.

But, this is not done as easily. First of all, the USA is still the most important economy in the world. So, if a reserve currency switch was to happen too quickly, it “could” pose problems to the USA and if their economy is affected, the world’s economy will be affected (this is speculation, but it could be “bad”). This is why no nation wants to make a quick switch, but rather a gradual one.

http://en.wikipedia.org/wiki/Petroeuro
http://en.wikipedia.org/wiki/Money_mechanics

Before I go further, lets do a fact check. How are the facts up to now. Anyone has comments or corrections?

 

[jimmoyer]

RE: The Euro vs Dollar Conspiracy Theory: part II - "T

Good work Huck and Toro.

Whether we finally agree is almost irrelevant now,
because this thread has been highly educational
about the mechanics of different currencies.

 

[Huck]

Re: The Euro vs Dollar Conspiracy Theory: part II - "T

OK, let’s continue.

First, we are going to explain how the US can have such an immense debt, and keep running with and getting it bigger without having to repay it, (remember, you can not borrow money eternally, you have to repay your debt, or your money will devalue and wont be able to borrow and repeal foreign investments).

So, basically, the World Bank and the IMF lend money in USA dollars. So, to repay their debts, other countries (other than the USA) must acquire US dollars by selling goods to the USA. So, when the USA borrows money, they borrow it from the World Bank and IMF, in US dollar. Of course, the banks know that the USA are good for the money, because the other countries will repay their debts in this currency. And to do so, will stimulate American economy by selling them goods which Americans pay with made up money. This is why the USA can borrow, and borrow and borrow, and the debt grows, and even in trade deficit (which means they make no money, so in theory can’t repay the debt) they can keep borrowing money. This is because the banks know the rest of the world still value USD and crave it.

http://en.wikipedia.org/wiki/U.S._public_debt

Also, in 1973, Richard Nixon detached the American dollar from the gold standard, making it what is called a fiat currency. This basically means that the American dollar was no longer backed by established valuables such as gold and has the value that the world agrees to give it. So, if the world decides that USD is worth 0$ (hypothetically), then it will lose all its value. This is also an important concept, as this means the dollars value is linked with the value the world gives it, which is linked to the amount of reserves the world maintains. If the world was to depart from American dollar for, say euros, then the greenback would lose some of its international appeal as not that many people would want them.

http://en.wikipedia.org/wiki/History_of_the_American_dollar

Ok, at this point we have successfully proven that being a reserve currency is VERY important to the USA, because it enables all the effects we described bellow. At this point, we will continue to ignore the USA economy and the effect the reserve currency change would have on it. We will simply assume that there will be change in the rage of either very bad to nil.

Now, let’s assume for a minute that the euro becomes the main reserve currency. The conversion rate for the euro is somewhere around 1.20 USD. So, if suddenly the oil was to be trade in euros, that means that the Americans would not be paying their oil 1$ like before, but 1.20$!! so, what would happen is that the Americans would begin acting like the rest of the world and begin selling goods to Europe to gain euros, in return to buy oil at market price without conversion. To do so, the USA would have to ensure that their economy is capable of buying more than they import: the inverse of the current situation!! But, because the rest of the world would not need any more USD, but euros instead, they would reduce their exports to the USA and redirect them to Europe. This would cause a major drop for the USA imports. They would then have to pay, like everyone else the goods they import, and this is not cheap, because you must work for your money.

So, it is now clear that although we don’t know the impact of the euro on America’s economy, we can already suppose it will be somewhere between important to dramatic. (yes, this is speculation for the moment, but there is nothing wrong in doing projections)


Now, lets move to the OPEC.


Since its inception, all oil has been transacted in USD. When Nixon detached the dollar from the gold, the OPEC had announced that they wanted to switch to the euro, because the dollar was not supported by gold anymore and could prove dangerous and unstable. But, for ‘some reason’, Saudi Arabia refused and the project aborted and remained in USD.

In 2000, Saddam Hussein started to sell its oil in euros. After the war, in July 2004 when the oil started to flow again, the denomination had been reverted back to dollars.

Venezuela's president, Hugo Chavez has also declared that his oil would be trade in euros. In 2002, a coup, (said to be supported by the white house) attempted to take him out and failed.

On March 23rd, 2006, Iran will begin a new oil bourse that will trade in euros. It will also sell its oil in euros. The same day, the Federal Reserve will stop displaying the m3 money supply data on the US dollar. Speculation is on, but it is said that some dollar instability is to be hidden.

All the countries are so called enemies of the united states and often bashed in the media.

Russia has also announced that it may start trading its oil in euros.

http://en.wikipedia.org/wiki/Petroeuro
http://en.wikipedia.org/wiki/OPEC
http://www.federalreserve.gov/releases/h6/discm3.htm


Ok, so where do we stand? Now, we KNOW that the euro vs. the dollar is not a myth, but reality. The Europeans want to their piece of the pie and for that they are lobbying for the euro to be the main oil currency. What we don’t know yet is if it can justify a war, but we can begin to have some serious doubts that it can. We will try to prove this later as we examine the US economy.

Speculation alert: It is also now more obvious why the enemies of the USA want the euro so badly to replace the USD. They want to stop feeding the dragon. It also explains why the rest of the world envies the USA, we are basically farmers to provide goods for USA. But, remember that a change can not happen too fast because if a US economy crashed occurred, the rest of the world would fall too, and no one wants that, neither Europe, neither the middle east. So, just has to be gradual. As for the USA, we can suppose that all they can do is to maintain the dollar with its privileges. Of course, the obvious means are either lobbying, or force.


So again let’s do a fact check. Any comments? (if i forgot anything or got anythign wrong, please tell me, the goal is to get the facts and the truth.)

 

[Toro]

Re: The Euro vs Dollar Conspiracy Theory: part II - "T

We want to know if the fact the USA being the world reserve currency provides it any enviable advantage.

It does provide an advantage because it lowers the interest rate on US assets.

Most central banks do not hold actual currencies. They usually hold the bonds of that country because currencies earn nothing. Bonds earn yield. Buying bonds pushes up the price of the bond and lowers the yield.

 

[Toro]

Re: The Euro vs Dollar Conspiracy Theory: part II - "T

I would be careful of using wikipedia as a valid source as sometimes contributors are people with a political axe to grind.

It was also decided that the world bank AND the International Money Fund (IMF) would perform all loans in USD. From then on, all loans awarded to countries and oil transactions were defined in American dollars.

This is false. Go right to the source.

The IMF can also create international reserve assets by allocating SDRs to members, which can be used to obtain foreign exchange from other members.

The IMF

What are SDRs, or Special Drawing Rights?

The SDR is neither a currency, nor a claim on the IMF. Rather, it is a potential claim on the freely usable currencies of IMF members. Holders of SDRs can obtain these currencies in exchange for their SDRs in two ways: first, through the arrangement of voluntary exchanges between members; and second, by the IMF designating members with strong external positions to purchase SDRs from members with weak external positions.

...

Thus far, the IMF has allocated a total of SDR 21.4 billion,

http://www.imf.org/external/np/exr/facts/sdr.HTM

SDR includes dollars, euros, yen and sterling.

http://www.imf.org/external/np/fin/rates/rms_sdrv.cfm

A Factsheet - September 2005
IMF Borrowing Arrangements: GAB and NAB

While quota subscriptions of member countries are its main source of financing, the IMF can activate supplementary borrowing arrangements if it believes that resources might fall short of members' needs. Through the General Arrangements to Borrow (GAB) and the New Arrangements to Borrow (NAB), a number of member countries stand ready to lend additional funds to the IMF.
The General Arrangements to Borrow (GAB)

The GAB enable the IMF to borrow specified amounts of currencies from 11 industrial countries (or their central banks), under certain circumstances, at market-related rates of interest. The potential amount of credit available to the IMF under the GAB totals SDR 17 billion (about $25 billion), with an additional SDR 1.5 billion available under an associated arrangement with Saudi Arabia.

Participant

Belgium
Canada
Deutsche Bundesbank
France
Italy
Japan
Netherlands
Sveriges Riksbank
Swiss National Bank
United Kingdom
United States

http://www.imf.org/external/np/exr/facts/gabnab.htm

The World Bank

IBRD is an international organization which conducts its operations in the currencies of all of its members. IBRD’s resources are derived from its capital, borrowings, and accumulated earnings in those various currencies.

http://www.worldbank.org/annualreport/2004/pdf/ibrd.pdf

Further down the annual report, we see the following loans

2004 adjustable loans by currency

In Euros - $6.2 billion.
In Yen - $5.9 billion
In dollars - $5.2 billion
In other currencies - $1.5 billion

So we know that Huck's claim (or more likely, the claims of those Huck references) that only dollars are used in lending is false.

 

[Toro]

Re: The Euro vs Dollar Conspiracy Theory: part II - "T

Now, what does buying something benchmarked in USD imply? Here is an example:

Canadians must buy in Canadian dollars as this is how we earn our money. But, the CAD may not have the parity with the USD, so there is a conversion loss when transacting in a foreign currency. Canadians know this mechanism well as when we buy in the states, something that costs 10$ USD, will cost us 11.30$ CAD. So, for an equal salary, we have a disadvantage with the US buyers. Even worse, if the CAD value fluctuates, like when it was at 63 cents, then it would cost us even more!! This concept also applies to loan repayment. If Canada has a loan from the world bank for 1000$ US (hypothetical number), well it will not cost us 1000$, but rather 1152 $ CAD, we need to work more to repay it!

Huck makes a common mistake - equating relative prices with nominal currency values.

At any given time, it does not matter if US$1=C$1. It does not matter if its US$1=C$10 or US$1=C$100, etc. What matters are the relative costs between the two currencies. In economics, the relative costs and prices between currencies are known as "Purchasing Power Parity."

Here is a definition

The PPP rate is the exchange rate which would mean that the money you exchange would buy exactly the same basket of goods in both countries. For example, say a certain basket of goods costs £25, and the same basket costs $50. The PPP rate would be £1 = $2. The PPP rate will often differ from the actual rate.

Link

It doesn't matter if currencies are at par. What matters is what each currency can buy.

So, in our above example, if you make £25,000, that is equivalent to making $50,000.

So Huck's example of the costs of currency was either incorrect or incomplete.

The only cost is the cost to trade, or the bid/ask spread of currency rates, commission and market impact, not whether a currency is at par.

There is a cost to economic volatility, however, because costs adjustments usually lag product price adjustments.

 

[Huck]

Re: The Euro vs Dollar Conspiracy Theory: part II - "T

Interresting Toro.

Bedore we can admit this as fact, I must ask these questions:

If I understand correctly, for the SDR, it is a composite made of a basket of currencies, but IS valued in USD. Here is an excerpt from a link you sent:

The U.S. dollar-value of the SDR is posted dailyon the IMF's website. It is calculated as the sum of specific amounts of the four currencies valued in U.S. dollars, on the basis of exchange rates quoted at noon each day in the London market.

So, this means it is valued in UDS, with all the conversion problems associated, no? I am still investigating for the world bank.

in the advent that these institutions allow currencies other than the USD would reduce the amount of the 70% currency reserves stocked up for loans. This would mean that more of it is associated with commodities prices in USD and local currency valuation. Obviously, this would make the impact of the euro change even more distruptful for the US dollar.

anyway, i am investigating the world bank. Thanks Toro.

 

[Toro]

Re: The Euro vs Dollar Conspiracy Theory: part II - "T

Interresting Toro.

Bedore we can admit this as fact, I must ask these questions:

If I understand correctly, for the SDR, it is a composite made of a basket of currencies, but IS valued in USD. Here is an excerpt from a link you sent:

...

So, this means it is valued in UDS, with all the conversion problems associated, no? I am still investigating for the world bank.

Again, its not a "conversion" problem. The world doesn't use a global currency, so for the sake of simplicity, they report in US dollars. This is where it appears - at least to me - that you are getting confused. The fact that something is valued in US dollars does not mean everything is actually transacted in US dollars. But the US dollar is a benchmark, and valuation is merely that, valuation.

For example, several Canadian companies - including Nortel I believe - report their financial statements in US dollars even though they are based in Canada, and sell more than half of their equipment to other parts of the world. The reason why they do that is because the majority of Nortel's investors are (or at least, were) based in the US. However, Nortel conducts operations all around the world in different currencies and is domiciled in Canada.

 

[Huck]

Re: The Euro vs Dollar Conspiracy Theory: part II - "T

Toro, About the PPP, doesn't it come down to the same thing?

PPP takes a fair amount of time to equalize, and negative currencies to the USD will still lose at the conversion. Right?

 

[Huck]

Re: The Euro vs Dollar Conspiracy Theory: part II - "T

Toro, i am well aware that not everything is transacted in USD. but, if the prifces are marked in USD, but bought in canadian dolalrs, then there is a conversion loss due to the rates.

If we both get 100$, but yours is USD and mine is CAD< you can obviously buy more commodities than i do since my conversion rate is negative to your currency.

 

[Huck]

Re: The Euro vs Dollar Conspiracy Theory: part II - "T

As for the company example, there is not cost at converting numbers in USD for the sake of presentation, it is just another represenation. But, actually conducting business in another currency can give a loss. For example, the company i work for gets paid only in USD, and for obvious reasons. When they convert it back to CAD, they multiply the amounts by 1.13

The recent raise of the CAD from .63 to .87 made a big difference for canadian companies, as much less money is now lost when dealing with international providers...

 

[Toro]

Re: The Euro vs Dollar Conspiracy Theory: part II - "T

Toro, About the PPP, doesn't it come down to the same thing?

PPP takes a fair amount of time to equalize, and negative currencies to the USD will still lose at the conversion. Right?

The point of PPP is that what matters are relative costs and prices. What matters is how your balance sheet adjusts to those fluctuations.

You make the mistake that there is always a loss. That is incorrect. If you are selling into the States and the loonie strengthens, then you lose. However, if you buy stuff from the States, you win. And vice-versa when the loonie weakens. It just depends on what happens to your cost structure.

For the record, in general, a strengthening currency based on fundamentals is a good thing.

 

[Huck]

Re: The Euro vs Dollar Conspiracy Theory: part II - "T

Toro, exactly. So as i said, dealing in another currency than the USD can cause a loss. So, it is advantageous to stock on USD, where the value and purchase capacity is constant.

Do you agree to admit this as fact?

I also suggest we consider the IMF as dollar based, and as for the world bank, i did found that the discount notes are in USD, but nothing yet for the rest (on their web site). We can for now admit that the world bank can transit in multiple currencies. IN any case, having the WB in multiple currencies suggests that the part of the reserve capital for the oil commodity is even greater; emplifying the effect of a swithc to the euro.

what do you think?