OPEC Members Seek a New Cash Reserve
An article in the LA Times takes a look at OPEC’s dissatisfaction with the declining U.S. dollar that may lead to a conversion of cash reserves to another currency. According to the article:
- Iranian President Mahmoud Ahmadinejad said Sunday that OPEC’s members have expressed interest in converting their cash reserves into a currency other than the depreciating U.S. dollar, which he called a “worthless piece of paper.”
- “They get our oil and give us a worthless piece of paper,” Ahmadinejad told reporters after the close of the summit in the Saudi capital of Riyadh. He blamed President Bush’s policies for the decline of the dollar and its negative effect on other countries.
Oil is priced in U.S. dollars on the world market, and the currency’s depreciation has concerned oil producers because it has contributed to rising crude prices and eroded the value of their dollar reserves.
“All participating leaders showed an interest in changing their hard currency reserves to a credible hard currency,” Ahmadinejad said. “Some said producing countries should designate a single hard currency aside from the U.S. dollar . . . to form the basis of our oil trade.”
- Venezuelan President Hugo Chavez echoed this sentiment Sunday on the sidelines of the summit, saying, “The empire of the dollar has to end.”
“Don’t you see how the dollar has been in free-fall without a parachute?” Chavez said, calling the euro a better option.
Now there are several ways you can react to news like this. You can team up with the chauvinists and blindly defend the honor of the falling dollar, taking any negative comment about the U.S. dollar as a personal insult against the United States. Or you can accept that they have a point; the dollar is losing its worth. Let me put it this way: the U.S. dollar is falling. We can try to drag everyone down with us and cause a worldwide collapse. Or we can do our best to stabilize the economy and, in the worst case scenario, graciously accept the help of other nations when our dollar falls through. Utahns are seeking their own source of cash reserves by using Utah home equity loans.
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