Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Claude Cormier who wrote (50484)	1/20/2006 3:21:57 PM
From: GST	Read Replies (2) \| Respond to of 110194

You are talking to a gut who thinks that inflation has nothing to do with prices -- it stands to reason that he has no concern with the demand side of the market for money, only the supply side.

To: Claude Cormier who wrote (50484)	1/20/2006 4:46:59 PM
From: benwood	Read Replies (1) \| Respond to of 110194

When I travel to Canada, I buy stuff in Canadian dollars, so often exchange some portion of my US dollar holdings into Canadian dollars prior to my trip. I walk around with them in my pocket, just in case. If I don't, I still make the US-to-CAN exchange, but I simply do so off the spot market at the time of purchase, via my ATM card or my credit card. But either way, I do the conversion. If countries start buying oil in Euros, they can similarly exchange US dollars that are kept on hand solely for use in the dollars-for-oil trade into Euros, which will now be kept on hand for euros-for-oil trade. If they don't, then, like me without cash in Canada, they would make the exchange into euros using the spot market price, meaning they exchange their local currency into euros at the time of purchase. If oil happens to be the one item they used to purchase that was denominated in US dollars, they now have no need to own dollars at all. Simple. Separate from their transactional needs, they might keep US dollars around as a store of value cough cough but they might not. Especially if the value of the US dollar is declining because everybody can now by oil in euros, so everybody is reducing their mountain of US dollars for something that is more practical. Forest/trees kind of thing I think.

To: Claude Cormier who wrote (50484)	1/20/2006 6:14:36 PM
From: mishedlo	Read Replies (1) \| Respond to of 110194

The decision to price in Euros would only come from a decision not to hold dollars. They can not hold dollars now if they do not want to. OTOH, just because they priced in Euros does not me they can not or will not hold dollar reserves. Thus where they hold there reserves is the important factor, what it is priced in is of little practical relevance. One has to be really silly to think we would go to war over a pricing unit. If countries do not want to hold US$ they will not hold them regardless of what something is priced in. If they do want to hold US$ reserves then they will do so regardless of what something is priced in. Yes if they price in Euros they probably want to hold less dollar reserves but the decision to hold less dollar reserves is the key and not the pricing unit. The pricing unit is irrelevant outside of Yap Island stones. Mish

To: Claude Cormier who wrote (50484)	1/20/2006 8:54:08 PM
From: Tommaso	Read Replies (1) \| Respond to of 110194

>>> If you can pay for oil with Euros, don't you have less incentive to hold $US dollars. So it means that more USD would come back to the US from that pipeline<<< Eventually those dollars are claims on services and property and goods in the United States, which is the only place where they are legally required to be accepted as payment for debts. The whole complex, however, or foreign exchange escaped my imagination. Clearly SOMETHING is needed for international debt settlement and even now the most important thing is U.S. fiat dollars. I think you and I have the same views about the U. S. dollar. It's just I think oil is a better place as a store of value while you think gold is better.