Weak Dollar... Street Rioting Is Next, Right?

Today the dollar lost value against the major international currencies (because Australia raised interest rates) and this prompted the Chinese to once again try to have oil priced in a different currency other than dollars; they’d no doubt prefer the yuan.

The problem with pegging ANY international commodity or means of valuing an object to the Chinese yuan, is that the Chinese government controls the convertibility of the yuan. As the yuan doesn’t “float” against other currencies and get valued by market forces, it is true value is suspect (currently the yuan is vastly undervalued, hence the reason why Chinese goods are so cheap on the international market, and one of the reasons why the Chinese economy is so strong).

The Russians have been trying to get oil priced in a different currency, Euros perhaps, for a long time, because as the Muscovites lost their superpower status, the schemers in the Kremlin wants some ability to be relevant again on the international stage. Not gonna happen for Moscow; that country is losing citizens like you wouldn’t believe (population has declined for the 15 year in a row, even with mothers getting a bonus check for having kids) and the economy is controlled by a few (like the US) who are wildly corrupt and use menacing and repellent violence to get what they want done (unlike the US).

Of course the Saudis have refused to price oil in anything other than dollars, and they summarily declined the Chinese request. This possibly has something to do with the little-publicized knowledge that the US can blow-up the Saudi refineries and petro-infrastructure. Plus there is some bizarre relationship between the Saudis and the US that can't be explained as to why the Saudis back the US's global powerplays when George Bush the Elder was most active on the global stage.

But perhaps in 7 years from now, when the US still hasn't regained any financial strength, the dollar will no longer be the pricing currency for any globally trade commodity (maybe pork bellies and oranges). When that happens, best believe the US economy will stumble into a depression that it'll never recover from. The dollar will weaken so much and the thirst for foreign oil won't have changed that much... and the US economy will have less buying power to get all goods that it wants. That's when the standard of living gets crazy as it nose-dives in way that will be unprecedented. The only precedent we have is the fact that when empires collapse it is UGLY!