Two days ago the British newspaper The Independent published a rather dubious report by Robert Fisk claiming that oil-producing Arab states along with China, Russia, Japan and France were conspiring on a plan to dump the dollar for oil trading, a move which would seriously weaken our currency and influence abroad.
The Arab states named in the report have issued denials… there may still be a grain of truth in the report though as both Russia and China have been very vocal in their calls to end the Dollar’s reign in international trading:
Leaving aside the viability of the unified GCC currency – Oman and the Emirates have made clear they don’t want to play – the story has a ring of truth about it.
Russia and China have both been vocal in their call to end the hegemony of the greenback in international trade. The single GCC currency, if and when it happens, would be more likely to use a currency basket than a direct dollar peg. With the possibility of intervention now back in its arsenal Japan will clearly do what it feels necessary to protect its deflationary economy from an over-strong currency. France, of course, would take any opportunity to give Washington one in the eye.
In that light it is no surprise that the dollar has taken a bit of a beating since the news broke. It has lost one euro cent and half a yen overnight, adding to the losses it had already made on Monday in the absence of any helpful comment from G7.
Regardless The Independent’s report should server as a stark reminder to our elected leaders of need for sound fiscal policy, a strong stable dollar and real energy independence.
Sarah Palin makes the case on her Facebook page:
All of this is a result of our out-of-control debt. This is why we need to rein in spending, and this is also why we need energy independence. A weakened dollar means higher commodity prices. This will make it more difficult to pay our bills – including the bill to import oil.
In his book Architects of Ruin, Peter Schweizer points out that the Obama administration is focusing primarily on “green energy,” while ignoring our need to develop our domestic conventional energy resources. We’re ignoring the looming crisis caused by our dependence on foreign oil. Because we’re dependent on foreign nations for our oil, we’re also at their mercy if they decide to dump the dollar as their trade currency. We can’t allow ourselves to be so vulnerable to the whims of foreign nations. That’s why we must develop our own domestic supplies of oil and gas.
Though the chant of “Drill, baby, drill” was much derided, it expressed the need to confront this issue head-on before it reaches a crisis point.
Bottom line: let’s stop digging ourselves into debt and start drilling for energy independence.
Gas prices have dropped considerably since the last oil shock made energy independence a front burner issue in the minds of most Americans… The coming debate on Cap and Trade may help bring the issue of energy independence back to the forefront but I suspect it’ll be lost in amongst the debates on the new taxes, costs, and mandates Cap and Trade create.
Whether we like it or not our economy is powered by oil and natural gas… and there is simple no reason not to tap into a significant domestic reserves of both.