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  • Gazprom-Neft-to-Sell-Oil-For-Rubles-Yuan

    http://en.ria.ru/business/20140827/1...bles-Yuan.html

    I was actually expecting to see news of this here so I suppose I can do the honors.

  • #2
    Re: Gazprom-Neft-to-Sell-Oil-For-Rubles-Yuan

    Bretton - Woods, the Nixon Shock. If this plays out it will be added to the list of monetary milestones.

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    • #3
      Re: Gazprom-Neft-to-Sell-Oil-For-Rubles-Yuan

      Originally posted by don View Post
      Bretton - Woods, the Nixon Shock. If this plays out it will be added to the list of monetary milestones.
      It will be interesting to see . We are also in the middle of a US energy boom so the dollar is now still good for oil. I will also look to see if the US trade deficit changes to surpluses. Makes you wonder if the slack in our system was to intentionally have capacity to absorb dollar repatriation.

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      • #4
        Re: Gazprom-Neft-to-Sell-Oil-For-Rubles-Yuan

        Originally posted by gwynedd1 View Post
        It will be interesting to see . We are also in the middle of a US energy boom so the dollar is now still good for oil. I will also look to see if the US trade deficit changes to surpluses. Makes you wonder if the slack in our system was to intentionally have capacity to absorb dollar repatriation.
        It's not the US able to buy oil with USD that should be of concern as of now, given most oil producers still accept USD, the short to mid-term concern is foreign nations ability to buy OPEC and Russian oil with alternate non-USD currencies. As you state, dollar repatriation is the concern to the USA. My 10,000 foot level understanding of the theory is that for each de-dollarization bilateral trade agreement (i.e. Russian Oil for Chinese Yuan), USD reserves are reduced and find their way back to the USA (aka. "repatriated"). This of course results in more dollars chasing after same # of goods, which translates to higher inflation for US consumers buying imported goods. Probably just as, if not more important, is the impact of further diminishing status of USD as global reserve currency as each bilateral trade deal occurs between large GDP countries, whether for oil trade or trade in general. Anybody got a global chart of the USD de-dollarization progression? We can see the net effect it in the pie chart below as USD is slowly losing its global reserve status, but would be interesting to see who the biggest 'offenders' are of this trend.











        Couldn't find a global historic chart of foreign reserves held by country in USD, only South America...I believe this is tracked by the World Bank and possibly the IMF, but all data I could find combined all types of reserves for each country (i.e. gold + dollars + other currencies +SDRs) as a single number per country, thus can't find data/chart showing global USD de-dollarization progression over time, but surely the data exists somewhere.....



        ...This is the net effect though:

        Last edited by Adeptus; August 28, 2014, 02:48 PM.
        Warning: Network Engineer talking economics!

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        • #5
          Re: Gazprom-Neft-to-Sell-Oil-For-Rubles-Yuan

          Originally posted by Adeptus View Post
          It's not the US able to buy oil with USD that should be of concern, as much as foreign nations ability to buy OPEC and Russian oil (would be considered second largest producer if part of OPEC) with US dollars. As you state, dollar repatriation is the concern to the USA. My 10,000 foot level understanding of the theory is that for each de-dollarization bilateral trade agreement (i.e. Russian Oil for Chinese Yuan), USD reserves are reduced and find their way back to the USA (aka. "repatriated"). This of course results in more dollars chasing after same # of goods, which translates to higher inflation for US consumers. Probably just (if not more) important, is the impact of further diminishing status of USD as global reserve currency as each bilateral trade deal occurs between large GDP countries, whether for oil trade or trade in general.






          Most people here should very much know that dollars are used for transactions not involving US goods and services and that oil transactions soak them like a sponge that may one day be wring out. However my point was fewer would be going out as they were in the past. Thus it may help to soften the blow, as would a country sitting on a lot of spare capacity.


          That is to say it could be far worse . In fact I think its ultimately damaging like a financial form of Dutch disease, never to have to convert a dollar we spend.
          Last edited by gwynedd1; August 29, 2014, 01:01 PM.

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          • #6
            Re: Gazprom-Neft-to-Sell-Oil-For-Rubles-Yuan

            the dollar as reserve currency is absolutely vital to funding the military's global reach. They are joined at the hip. That's why the reaction is so violent when any alternative is projected or practiced. Of course magnitude is important, but making this change, without suffering regime change, bombing, invasion, or sanctions - though that isn't exactly the case, in this sense the Ukraine is a red herring - is a qualitative change of this sort is verboten in Washington. How violent the reaction will prove to be is yet to be seen. Buckle up.

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            • #7
              Re: Gazprom-Neft-to-Sell-Oil-For-Rubles-Yuan

              a) "This of course results in more dollars chasing after same # of goods, which translates to higher inflation for US consumers buying imported goods."
              that is if the value of the dollar is actually falling. currently the dollar (as measured by a basket of currencies making up the DXY) is hitting 12-month highs

              b)the IMF pie chart of "Market Share of Foreign Exch Reserves" is a poor comparison, at least for the period 1999 - 2000. sure, it shows USD losing 9% with the biggest offset to the EUR at + 8%. But the Euro launched in 1999 so it's seems perfectly reasonable that as the adoption of the euro has increased, so too would it's participation as a reserve currency.

              for usd repatriation into the US, i suspect that's happening but the result is not inflation of imported goods. it's inflation into real assets such as housing, land, etc. places like NYC, Miami, california are experiencing housing booms and based on anecdotal evidence, a lot of the money in those markets is foreign.
              Last edited by pescamaaan; August 28, 2014, 04:42 PM. Reason: typo

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              • #8
                Re: Gazprom-Neft-to-Sell-Oil-For-Rubles-Yuan

                Originally posted by pescamaaan View Post
                a) "This of course results in more dollars chasing after same # of goods, which translates to higher inflation for US consumers buying imported goods."
                that is if the value of the dollar is actually falling. currently the dollar (as measured by a basket of currencies making up the DXY) is hitting 12-month highs

                b)the IMF pie chart of "Market Share of Foreign Exch Reserves" is a poor comparison, at least for the period 1999 - 2000. sure, it shows USD losing 9% with the biggest offset to the EUR at + 8%. But the Euro launched in 1999 so it's seems perfectly reasonable that as the adoption of the euro has increased, so too would it's participation as a reserve currency.

                for usd repatriation into the US, i suspect that's happening but the result is not inflation of imported goods. it's inflation into real assets such as housing, land, etc. places like NYC, Miami, california are experiencing housing booms and based on anecdotal evidence, a lot of the money in those markets is foreign.
                Very good points!
                Warning: Network Engineer talking economics!

                Comment


                • #9
                  Re: Gazprom-Neft-to-Sell-Oil-For-Rubles-Yuan

                  Originally posted by Adeptus View Post
                  Very good points!
                  Indeed. Remember when "inflation wasn't happening" during the housing bubble as well?

                  Actually what happens is not necessarily inflation. Its either inflation or the economy shrinks.

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