Petrodollars and Inflation
Someone has to pay for the subsidized interest rates and that someone is anyone holding dollar-denominated assets. Despite the disdain some foreign politicians and planners in oil state may have for the US government, by pegging rates to the dollar and mandating the use of dollars for petroleum, they continue to prop up a dying fiat system at the expense of their own standard of living. FULL ARTICLE
Comments (10)
mark
And what would have happened to Kawait had they had private currencies?
Probably, Saddam would still be in power and expanded his empire to include Saudi Arabia by now.
Oh, and please stop all this nonsense about "the peoples" standard of living. The Sheks don't look as if they're starving from having to in effect make negative real rates of return on their U.S. T- Bills.
Published: April 10, 2008 10:21 AM
Steve Hogan
One thing is certain: when the dollar craters and investors panic, governments will blame the "free" market for their criminal behavior. I don't hold out much hope for the average man on the street rejecting their inevitable finger-pointing, but Ron Paul's campaign and the reaction he's getting on college campuses allows one a glimmer of optimism.
Maybe, just maybe, the public will then demand a genuine free market money completely divorced from the state and the parasitic banking elite. A guy can dream, can't he?
Published: April 10, 2008 12:18 PM
jp
off topic, but great graphic. There's been a lot of good ones the last few weeks. Kudos to whoever makes them.
Published: April 10, 2008 12:26 PM
Pepe
Graet article Tim, thanks!
Published: April 10, 2008 12:50 PM
ScuzzaMan
Very good article. Where I come from - New Zealand - often seems to be the Fabians petri dish; as the rest of the world largely moves in lock-step with the Fed, as Tim notes, we've moved contrary to them. Consequently, our currency has appreciated by 100% against the US$, over the last 8 years. For an exporting-dependent country, this is bitter medicine to swallow.
What happens next, Tim?
Published: April 11, 2008 8:29 AM
newson
to tim swanson:
"have little choice but to mirror U.S. moves in deposit rates if they want to avoid attracting capital that would pressure currencies higher."
this quote, while obviously not yours, almost paints the arab states as victims. the imported inflation is in fact very welcome in the gulf, as least to the privileged . the 7000+ princes of the saudi royal family speak for 70% of the local bourse. (recently clawing back nicely its disastrous losses of a couple years ago).
in addition, the iranians changing their crude trade to euros hasn't stopped them pursuing the same impoverishing inflationary tactics at home, as per everybody else.
Published: April 12, 2008 10:39 AM
Chaudhary
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Published: September 18, 2008 1:24 AM
Chaudhary
The above posted paragraph contains very useful information about inflation, i hope every one should enjoy this.
Published: September 18, 2008 1:24 AM
Alex Peter
Inflation must be at a controlled increasing rate. too much increasing rate of inflation is not good for economy.
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Published: September 24, 2008 1:40 AM
Don Sabatini
Nice article. Very informative.
Published: April 27, 2009 8:24 AM