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greyangelus -> RE: Chavez urges allies to pull money out of US (1/28/2008 12:58:32 AM)
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Meh, has very little to do with WMD' s and everything to money. Petroleum by and large is still traded in dollars, which is how Venezuela derives pretty much all its income from the sale of (It is a member of OPEC after all). With the US economy tanking and taking the purchasing power of the dollar along with it, many oil-producing states are becoming leery of accepting dollars as payment for the oil. A majority of OPEC members depend upon American military and diplomatic muscle to stay in power, Saudi Arabia and Kuwait leap to mind ( remember Gulf I? It really was the oil, stupid), so they continue to insist upon dollars as payment, even though it is quickly turning into a liability for them, (quid pro quo arrangement in essence, also a major aggravating factor in the price of oil going so high in the last few years).
On the other hand, some major oil-producing states have already either stopped accepting the dollar as payment for oil, or they are moving to do in the near future. Wanna guess who these nations are?
Iraq (In 2000, Iraq stopped accepting dollars as payment under the Food-For-Oil Plan, only resuming accepts dollars for exported oil after 2003 http://www.trinicenter.com/oops/iraqeuro.html)
Russia (has expressed interest in an oil bourse in Russia, with trades accepted and denominated in rubles http://en.rian.ru/russia/20071114/88030056.html )
Iran ( Plans were afoot to open a oil bourse similiar to the IPEX and NYPEX denominated in euros as of 2004, payments for oil have be denominated in Euros or other currencies excluding the US dollar since late 2007 http://www.worldnetdaily.com/news/article.asp?ARTICLE_ID=59109 )
Venezuela ( In 2000, Chavex made arrangements to accept goods and services in lieu of dollar payments, has all initiated steps to complete remove all reserve dollar holdings in favor of euros, see the links for Iraq and Iran )
As for why all of this is important, this link pretty much says it better than I can http://www.trinicenter.com/oops/iraqeuro.html.
In summary, in order to retain its value despite the massive expansion of the money supply since 1973 (especially in the form of total Federal debt, note the years that the debt started to increase by a major percentage http://www.cedarcomm.com/~stevelm1/usdebt.png ), new things to shove that money into had to be created in order to hide that expansion. And "poof" the petrodollar is created.
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