tag:blogger.com,1999:blog-12059821.post114131909146164766..comments2023-08-04T00:54:13.506-07:00Comments on sandcastle in the tide: What Happens When Oil Trades In Mongolian Tugriksphotocuriohttp://www.blogger.com/profile/17453343897260760555noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-12059821.post-1142018318888500832006-03-10T11:18:00.000-08:002006-03-10T11:18:00.000-08:00Very good points. But I'm not sure that you direct...Very good points. But I'm not sure that you directly addressed the question, "what difference does it make what currency oil trades in, anyway?" You seem to have merely described the current environment realized by the Nixon administration's deal with the Saudis to price oil in dollars.<BR/><BR/>The currency that oil trades are denominated in makes the following difference: in order to protect the purchasing power (to buy oil) of their native currencies, countries must hold foreign reserve currencies denominated in the currency that oil trades in - if they don't, they may be subject to speculative currency attacks which will diminish their ability to buy oil. <BR/><BR/>See my post at:<BR/>http://combatraccoon.blogspot.com/2006/02/i-read-post-by-paul-craig-roberts-on.html<BR/><BR/>Obviously, this is not so much of an issue for countries like China who have a (relatively) pegged currency. They have their own obvious reason for holding dollars. But there are many countries out there that import oil - and they have to hold dollars (despite being such a liability) to protect their own currency's ability to purchase oil. Otherwise, someone like Soros might come along with a major smackdown.Aaronhttps://www.blogger.com/profile/12250785811384640662noreply@blogger.comtag:blogger.com,1999:blog-12059821.post-1141319415715609912006-03-02T09:10:00.000-08:002006-03-02T09:10:00.000-08:00Interesting and well written.http://judaspenrose.b...Interesting and well written.<BR/><BR/>http://judaspenrose.blogspot.com/Judashttps://www.blogger.com/profile/06215444169404855294noreply@blogger.com