Michael, infidel......
This is my understanding....
Q1. How did the Oil producers get the leverage over the West to sell the West oil priced in gold?
ANOTHER's point is that the price of oil--the freely determined market price implied by the current supply demand dynamic--is much higher than we think. It's, hypothectically, $40 a barrel. (Check out M-1, M-2 growth in the 80's, 90's).
So the question isn't "how did 'Oil' get the leverage to to sell oil priced in gold" but rather "how did the west get the leverage to buy $40/bll oil at $16." The answer is--apart form being a military protectorate in the region--by lowering the price of gold to a point $x.xx below its "true" value, so that the last $24 per barrel is paid with $x.xx worth of gold (with the gold discount).
Convenient: western citizens don't care much about the free gold given, but "Oil" does.
Q2. What about the Opec meeting?
With x amount of gold thrown in the payment mix, the Saudis expect oil to trade in a range, say $16-$18. Without it, say $37 - $43. Since the dervitives market can sometimes run away for physical reality, or because the unexpected happens (Asia) the Saudis will act to get oil into $16-$18 range again if it goes lower and even with gold thrown into the mix..
Q3. Why would the West agree to a strategy that would eventually lead to an exlpoding gold price and therefore oil price?
Best answered with a question: why does the west forestall recession with deficit spending when an even worse recession will occur when the principal is paid back with interest? ANOTHER also claims the CB's were counting on constant improvements in mining technology to hold the fort on gold indefinitely.
Q4 paper burning, when and how?
I don't know. The economic crisis that will ensue will make property rights take a back seat.
Q5 Then why doesn't the U.S. just take the oil?
Maybe it will. Maybe its trying and maybe WWIII will result.
And why didn't it just take the oil in the 70's, when the oil shock resulted in a decade of double digit inflation and stagnation?
P.S. The theory is a long shot but much more interesting than the POG lately. ;-)
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