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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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To: mishedlo who wrote (70595)10/28/2007 8:18:26 PM
From: JohnG  Read Replies (2) of 116555
 
"Pricing units however, are irrelevant"

But not irrelevant to the US. If oil were SUDDENLY no longer priced in dollars, the circulation of dollars in the world economy would be reduced significantly. The excess supply of dollars would increase -- read this as dollars looking for a home. The desirability to hold dollars as a reserve currency would diminish. All of this would RAPIDLY weaken the value of the dollar against other currencies. This could well lead to A NEGATIVE SPIRAL in the value of the dollar and an inrush of foreign buyers for tangible US assets.

Putting this imense quantity of dollars outside of the US was lots of fun as long as we were receiving tangible goods for paper dollars and dollar credits. It will be excruciateingly painful and inflationary if they all come flying home looking for tangible US assets.
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