Maktoob Business reports that more Middle Eastern countries are expressing public skepticism about the dollar.
Qatar's oil minister said there was an ongoing debate on whether to continue trading crude oil in the U.S. dollar or to shift to a basket of currencies, the official Qatar News Agency reported on Wednesday...
"The debate continues also on whether it would be beneficial to rely on the dollar as a currency to sell oil or to search for a basket of currencies," the agency reported Abdullah bin Hamad al-Attiyah, also deputy prime minister of the OPEC member, as saying in Italy.
This is a none-too-subtle message to the Obama administration: stop the insane deficit spending or face an economic catastrophe as countries abandon the dollar.
Gulf Times adds an additional, ominous detail. That is, Qatar may not be the only country complaining, despite earlier denials.
A long-running debate over the currency used for commodity dealings was raised again by an article that said China, Japan, Russia and France were in secret talks with Gulf Arab states to stop using the dollar for oil trading.
Big oil producers denied it at the time, but dollar weakness has has kept the question of whether it can remain the world’s reserve currency. Producers and oil company executives on Tuesday said the dollar was likely to stay the currency of oil trade and dismissed the speculation of a shift.
Why would the abandonment of the dollar as the reserve currency result in a disastrous devaluation? A thread at Zero Hedge explains:
GG, I understand that oil is priced in dollars and we have an agreement with the Saudis that we will protect them if they sell their oil in dollars, etc., but walk me through how the dollar becomes "finished" and how the dollar is backed by oil. Purchasing oil in dollars isn't the same as being backed oil-backed is it? Not disagreeing just trying to understand this better.
Basically the US "agreement" (oh come on who are we kidding here? They put a gun to their heads) with Saudis ensures that whoever needs to purchase oil from the middle east has to buy dollars first on the international market. This creates an artificial demand for a lot of dollars by all oil importing countries (China, India, etc. etc.) that would otherwise not be there. The important thing is that these countries therefore hoard dollars as "reserves" (they hoard it for other purposes/other commodities priced in USD as well but buying oil is by far the biggest factor) thus absorbing Uncle Sam's excess money printing. Hence there are a lot of of excess dollars floating around out there that would be dishoarded once USD is no longer needed to buy oil (plus when one of the big players starts getting rid of its dollars, others automatically HAVE TO follow as the first one out the door gets the best value. They will be pushing and fighting to be the first one out the door). The dollars would be sold off on the currency markets causing an extreme glut of dollars and skyrocketing the price of everything in terms of dollars - immediate and severe depreciation of the currency or hyperinflation. Now you know why Team Obama is sh***ing their pants right now.
Or perhaps Team Obama doesn't care and is simply executing their strategy: Never let a good crisis go to wait.