07-01-2009, 07:36 AM
Iran, India and the US Dollar
By Dr.Dipak Basu
Excerpt:
<!--QuoteBegin-->QUOTE<!--QuoteEBegin-->The Possible US Reaction:
India has failed to understand the reason why the United States is so interested in Iran The reason is pure economics. Iran threatens the US Dollar and its present status as the sole currency of the world for trade in oil and gas. It costs nothing for the US to import anything from the rest of the world or to keep vast American military bases throughout the world, as payments can be made by Dollar, which costs only the paper on which it would be printed. However, Dollar is required for every oil- importing countries of the world; and that it is reason central banks of most countries keep their reserves of foreign exchange mainly in Dollar. When more dollars are circulated outside the US, or invested by foreign owners in American assets, the rest of the world has to provide the US with more goods and services in exchange for these dollars. The US even can pay its debt to other countries just by printing its own money.
That special status of Dollar can be threatened if the oil producing countries switch from Dollar to Euro for trade in oil and gas. From May 2006, Iran has done just that, which Venezuela already did and Iraq wanted to do just before it was invaded.
As a result, Iran can seriously undermine the demand for Dollar in the world market. If other oil exporting countries follow Iran, Dollar will collapse along with the US economy. A proposal to create a different reserve currency rather than US Dollar is already suggested by Iran"s friend Russia in the recent BRIC ( Brazil-Russia-India-China) meeting. Iran has the third largest oil reserve in the world, and it can seriously undermine the special status of Dollar on which the US economy rests.
Thus, the turmoil in Iran can provide an excuse for USA to intervene to support a supposedly pro-Western progressive force in Iran opposing the present president. <!--QuoteEnd--><!--QuoteEEnd-->
By Dr.Dipak Basu
Excerpt:
<!--QuoteBegin-->QUOTE<!--QuoteEBegin-->The Possible US Reaction:
India has failed to understand the reason why the United States is so interested in Iran The reason is pure economics. Iran threatens the US Dollar and its present status as the sole currency of the world for trade in oil and gas. It costs nothing for the US to import anything from the rest of the world or to keep vast American military bases throughout the world, as payments can be made by Dollar, which costs only the paper on which it would be printed. However, Dollar is required for every oil- importing countries of the world; and that it is reason central banks of most countries keep their reserves of foreign exchange mainly in Dollar. When more dollars are circulated outside the US, or invested by foreign owners in American assets, the rest of the world has to provide the US with more goods and services in exchange for these dollars. The US even can pay its debt to other countries just by printing its own money.
That special status of Dollar can be threatened if the oil producing countries switch from Dollar to Euro for trade in oil and gas. From May 2006, Iran has done just that, which Venezuela already did and Iraq wanted to do just before it was invaded.
As a result, Iran can seriously undermine the demand for Dollar in the world market. If other oil exporting countries follow Iran, Dollar will collapse along with the US economy. A proposal to create a different reserve currency rather than US Dollar is already suggested by Iran"s friend Russia in the recent BRIC ( Brazil-Russia-India-China) meeting. Iran has the third largest oil reserve in the world, and it can seriously undermine the special status of Dollar on which the US economy rests.
Thus, the turmoil in Iran can provide an excuse for USA to intervene to support a supposedly pro-Western progressive force in Iran opposing the present president. <!--QuoteEnd--><!--QuoteEEnd-->