Mish, when I go to the bank to buy an ounce of gold (Canadian Maple Leaf), my Bank wants US dollars. If I have it in my pocket, good, I can buy it. If not, they will arrange to convert my Canadian loonies to US dollars and order the bullion. In other words, I am forced to have US dollars to do business. Almost every business I know has US dollar accounts to do every day business, not because of any currency spiraling out of control, but because international business is largely done in US dollars as a medium of exchange, and most commodities are priced in US dollars.
As far as oil is concerned, if a country needs to import oil from say Saudi Arabia, the Saudis want US dollars, not Russian rubles or Chinese renmimbis or Thai Bahts or Indonesian rupees. Those currencies have to be converted to US dollars locally through their banks. IOW, the local banks have to "purchase" US dollars through their central bank.
But you are right, if one is prepared to freeze in the dark while kicking snowballs down the road, no one forces anyone to hold US dollars. |
