Re petrodollars.
Firstly. Oil is a relatively small part of global trade.
Secondly
Japan needs to import oil for domestic use. To do so it must first acquire dollars, as the dollar is the main currency in which oil is traded. To acquire these dollars, Japan must sell goods and services to the U.S. economy.
I can't understand why anyone should say this.
The Japanese can sell their goods and services to whoever they wish, and then exchange THAT currency for dollars on the FX market.
However, US global hegemony has allowed the US to act as the Great Consumer for as long as people accepted dollars as payment ie a "dollar hegemony".
The key point is not what currency oil is priced in, but what happens to the proceeds.
And IMHO the age of the dollar is now over.
I don't follow your reasoning. They'll have to acquire dollars anyway, if the oil exporter does not accept the yen.
You might be right, but by investing those proceeds in US assets the oil exporters are perpetuating the concept of dollar as a pan-currency, hence creating the extra demand. Vencit omnia veritas.
Global GDP is $60T, isn't it?
Say you want to buy a barrel of oil and you have Y10K but no $. You call your friendly investment bank and buy $80 from them with your yen, and use that to buy the barrel. You don't have to have any dollar reserves.
The size and liquidity of the FOREX market is stunning. According to wikipedia, turnover is over $600B daily. It takes on the order of 2 weeks to move $5T. Can the last politician to go out the revolving door please turn the lights off?
I also don't think that the FOREX can give you an accurate account of the value of goods traded internationally - it's mostly currency swap.
Take the US case for instance:
Imports total 190 G$/month
Oil imports stand at 30 G$/month
So oil accounts for about 1/6 of their imports. Maybe not the best example, but you get the idea. Vencit omnia veritas.
GDP (purchasing power parity): GWP (gross world product): $65.95 trillion (2006 est.) GDP (official exchange rate): $46.76 trillion (2006 est.) Exports: $12.44 trillion f.o.b. (2004 est.) Imports: $12.09 trillion f.o.b. (2004 est.)
GDP (official exchange rate): $46.76 trillion (2006 est.)
Exports: $12.44 trillion f.o.b. (2004 est.)
Imports: $12.09 trillion f.o.b. (2004 est.)
As to wheter or not these numbers are comparable with those previously provided in this thread, I am not sure. Definitions within economics seams to be a tricky matter.
Exports: $12.44 trillion f.o.b. (2004 est.) Imports: $12.09 trillion f.o.b. (2004 est.)
Oil imports $360B/month Imports $190B/month GDP $417B/month Can the last politician to go out the revolving door please turn the lights off?
We know that the US pays $ for oil, that is her currency of course. The point at issue relates to other peoples' use of the "petrodollar", and I believe that many commentators - not to mention many conspiracy theorists - are labouring under a misapprehension as to the importance of the $ for denominating oil prices.
That having been said, an unHoly Trinity of:
(a) US massive over consumption of oil; (b) continuing growth of non-US global oil demand; and (c) the fact of a maximum level of global oil production (whether it is called a "peak" or a "plateau" is semantics);
will IMHO lead to a breakdown (slow motion crash if we are lucky), in the current global financial system and arising out of a discontinuity in the Dollar/Oil relationship. Within 2 to 5 years, I believe.
I don't think that the charts you have kindly supplied are inconsistent with that thesis.
They couldn't, because that thesis is the whole point. Vencit omnia veritas.
