We Are Facing an 'Inflation Holocaust': Jim Rogers

Markets do not trust the governments' plans to keep struggling banks alive and investors will only calm down when the companies with bad assets are allowed to go bankrupt, legendary investor Jim Rogers, CEO of Rogers Holdings, told CNBC on Friday.
"The way to solve this problem is to let people go bankrupt," Rogers said.
"Then you will hit bottom and then you start over. The people who are sound will take over the assets from the people who aren't sound and we will start over. This is the way the world has worked for a few thousand years."
The current rescue plans, which will force governments to issue more debt, print money and flood the markets with liquidity, will flare up inflation after the crisis is over and will create worse problems, Rogers warned.
"We're setting the stage for when we come out of this of a massive inflation holocaust," he said.
And the plans are unlikely to fend off a severe economic downturn, as the crisis starts affecting all walks of life.
"We had the worst excesses we had in credit markets in world history. We're going to have to take some pain," Rogers said.

Watch the interview and read the rest here

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The Zero Dollar - Is this what we have to look forward to?

Artist Laura Gilberts' print 'The Zero Dollar' protesting the breakdown of the American economy. Gilbert distributed 10,000 of the fake greenbacks in front of the New York Stock Exchange on Tuesday, Oct. 7, 2008 to call attention to the economic crisis gripping the nation.

The Dollar Crisis, The Recession & the views of Presidential Canidate Ron Paul

Bears are becoming harder to ignore

Tom Petruno:
Market Beat

Bears are becoming harder to ignore
November 24 2007

Peter Schiff and David Tice don't do what they do for the love it gets them.

They are two of the most bearish investment professionals in America. Their outlook for the U.S. economy and stock market is beyond grim.

Schiff, who heads brokerage Euro Pacific Capital in Darien, Conn., sees the dollar and stock market collapsing and the value of American per-capita economic output falling below that of Greece.

Tice, who manages the Prudent Bear mutual fund in Dallas, likewise predicts that U.S. markets will crumble and says the economy could face something akin to the Great Depression.

Of course, forecasts like these aren't the way to make a lot of friends in this country, let alone on Wall Street. Some would call being bearish on America unpatriotic, even treasonous.

And that means many investors long have automatically tuned out the likes of Schiff and Tice. Besides, the doomsayers have been wrong forever, haven't they?

Yet this year, with the debacle in housing and its toxic fallout in markets and in the financial system, the bears' warnings about the future may no longer seem quite so far-fetched. The risks to U.S. prosperity have risen markedly -- even many stock market bulls will admit that much today.

Schiff, 44, and Tice, 53, have no connection except for their outspoken pessimism about where the U.S. is headed.

They share the same basic thesis: America is facing its comeuppance for 25 years of borrowing and spending, saving little and relying increasingly on foreign capital to support its standard of living.

Now, the bursting of the housing market bubble, the surge in mortgage defaults and the plunge in the dollar have exposed what Schiff and Tice believe are serious structural weaknesses in the U.S. economy.

"Our economy is going to be a mess at the end of this," Schiff says. "Our assets are going to get very cheap."

His tactic for preserving his clients' wealth, he says, is to send it all abroad. He hunts for dividend-paying stocks of large foreign companies that are focused on their home markets -- names such as Swiss telecom giant Swisscom and the parent firm of Hong Kong utility China Light & Power Co.

In theory, Schiff's strategy will protect the purchasing power of the money if the dollar follows his script and continues to melt down.

A former Shearson Lehman broker, Schiff went into the business for himself in the mid-1990s in Southern California and moved East in 2004.

He concedes he was too early with his overseas-only stock strategy in the late 1990s.

With the dollar's slide since 2002, however, foreign stocks have been spectacular performers for U.S. investors. Schiff says his firm's client base has grown to more than 8,000 individuals with a total of $1 billion in assets. He and his brokers make money off the commission income from the trades they make, he says.

The idea of global portfolio diversification is one that many people have taken to heart in the last few years. Month after month, the lion's share of Americans' net new investment in stock mutual funds goes to foreign portfolios, not domestic.

Even so, most U.S. investors aren't abandoning their domestic holdings. That's where Schiff's acerbic views diverge from the mainstream.

The common perception is that the rest of the world needs the U.S. economy as a growth engine. Schiff says that is outdated thinking, given the rise of emerging-market economies such as China, India, Russia and Brazil. Because of America's heavy borrowing needs, "We're a burden on the rest of the world," he asserts.

"China is not export-dependent," he says. "They're exporting because Americans are consuming." Ultimately, Schiff says, "the Chinese are going to buy more of their own products." As their consumption rises and their savings rate falls, "they're not going to lend to us anymore."

If foreigners stopped exporting so much of their capital to the U.S., Schiff says, "they'd have more to spend themselves. And there are a lot more of them than there are of us."

One potential flaw in his strategy, however, is that a U.S. market and economic crash could drag the entire planet into recession or depression. Schiff thinks the rest of the world can overcome an American economic decline, though he says that, initially, foreign stock markets probably would fall along with Wall Street.

Tice's survival scheme for the U.S. economic and stock market downturn he foresees is to go "short": borrowing stock and selling it, betting the price will fall. If a short bet is correct, the seller eventually can repurchase the stock for less than the sale price and pocket the difference.

Tice has been a well-known short seller since the mid-1990s via his Prudent Bear fund. He earned hefty returns in the bear market of 2000 to 2002. But the bull market since 2002 has made life tough for short sellers: They can lose big if the stocks they're targeting rise instead of fall.

This year, Tice's $800-million fund is raking it in again. The portfolio is up about 15% year to date, compared with a 4.2% rise for the average U.S. stock fund. Tice has shorted stocks such as Starbucks Corp. and Harley-Davidson Inc. as well as many banking issues, he says.

He believes the American consumer is tapped out. "Real estate is just imploding," Tice says. Hundreds of billions of dollars in home equity have been pulled out in recent years to support Americans' spending, he notes. That binge now is over.

"The consumer looks like he's dying a slow death," Tice says. He expects that to lead the economy into a morass that will feed on itself.

"This is the big one," he says.

Wishful thinking on the part of someone who stands to lose a lot if the stock market zooms anew? Maybe. If money exits his mutual fund, Tice's management-fee income will dive.

Tice has two daughters, ages 18 and 21. He admits they don't share his dismal view of the future. "They say, 'It can't be that bad,' " he says. "They think we'll muddle through."

The majority of Americans probably share that sentiment. The U.S. economy is, after all, very dynamic. We may well look back on this period in a few years and marvel at how well it all worked out.

And even if the bears' darkest predictions come true, the performance of your investment portfolio may be the least of your worries. The more important question may be whether you have stored enough canned food and ammo.

Source HERE

The Fed's tightrope act

It's a long way down with no net. It may just take one more gust of wind and it's down down down.

Harry

The Fed's tightrope act

The banking industry is in a quagmire but the economy really isn't in that dire shape. And inflation is still an issue. What's Ben Bernanke and company to do?

See all CNNMoney.com

By Paul R. La Monica, CNNMoney.com editor at large

December 13 2007: 1:02 PM EST

NEW YORK (CNNMoney.com) -- The financial services industry is reeling due to exposure to bad subprime mortgage loans. But some market observers suggest that the rest of the economy is still in relatively decent shape, which could mean that the Federal Reserve may not cut interest rates that much further in 2008.

On Thursday, the government reported that the Producer Price Index, which measures wholesale prices, rose 3.2 percent, the biggest jump in 34 years. To be sure, much of this increase was due to soaring oil prices.

But the so-called core PPI number, which excludes volatile energy and food prices, rose 0.4 percent, above Wall Street's expectations of just a 0.2 percent increase. This could be a sign that inflation is still a concern.

What's more, despite all the doom and gloom about the housing market, the Commerce Department reported Thursday that retail sales surged 1.2 percent in November. And even if you exclude sales at gas stations, which were obviously juiced by rising prices at the pump, sales were still up a healthy 0.6 percent.

Largest jump in 34 years for wholesale prices

Add this up and the Fed's two big announcements this week suddenly seem to make a lot more sense.

"It's clear that the economy's moderation in recent months has been relatively gentle. There has been no outright collapse," said David Resler, chief economist with Nomura Securities International. "The economy may be on the soft side, but that doesn't mean we're going into a recession."

The Federal Reserve cut two key interest rates by only a quarter of a percentage point Tuesday, a move that caused Wall Street to panic. The Dow plunged nearly 300 points.

Many investors were hoping for a half-point cut, or at the very least, a half-point cut to the discount rate, which is what it costs banks to borrow directly from the Fed. But Wednesday, Ben Bernanke & Co. saved face somewhat by announcing a plan to inject billions of dollars into the banking system.

In conjunction with several other central banks in Canada and Europe, the Fed said it would conduct four auctions in the next month that will allow banks to bid for loans. Sources said it will probably cost banks less than the 4.75 percent discount rate to borrow money this way.

The combination of a mild rate cut and the new auction system seems to indicate that the Fed is looking for a creative way to solve the credit crunch on Wall Street rather than by simply slashing interest rates.

Source here.

America's vulnerable economy

America's vulnerable economy

Nov 15th 2007
From The Economist print edition

Recession in America looks increasingly likely. Can booming emerging markets save the world economy?

IN 1929, days after the stockmarket crash, the Harvard Economic Society reassured its subscribers: “A severe depression is outside the range of probability”. In a survey in March 2001, 95% of American economists said there would not be a recession, even though one had already started. Today, most economists do not forecast a recession in America, but the profession's pitiful forecasting record offers little comfort. Our latest assessment (see article) suggests that the United States may well be heading for recession.

Granted, GDP grew by a robust 3.9%, at an annual rate, in the third quarter. Granted also, revisions may well push this figure up. But that was the past. More timely signs suggest that the economy could stall in this quarter. By early next year, output and jobs could be shrinking. The main cause is the imploding housing market. Experts said that house prices could never fall nationwide. But fall they have, by 5% in the past 12 months. Residential investment has collapsed, but a glut of unsold homes means that prices have much further to drop. Americans' spending is likely to be dented much more by a fall in house prices than it was in 2001 by the stockmarket's collapse. With house prices lower and credit conditions tighter as a result of the subprime crisis, households can no longer borrow against capital gains to support their spending.

Dearer oil is set to squeeze households further (this week's drop in crude prices notwithstanding). Consumer confidence has already fallen sharply. It cannot be long before consumer spending stumbles, which in turn would hurt companies' profits and investment. The weak dollar will boost exports, but at only 12% of GDP, exports are too small to make up for a weakening of consumer spending, which accounts for 70%.

I want to break free

Will an American recession drag the rest of the world down with it? The economies of Europe and Japan rebounded strongly in the third quarter, but look likely to slow down. Although both should be able to keep chugging along, neither is likely to set any great pace. Strengthening currencies will hurt exporters in both places. Europe's own housing hotspots are cooling, and some of its banks have been sideswiped by America's subprime ills.

The best hope that global growth can stay strong lies instead with emerging economies. A decade ago, the thought that so much depended on these crisis-prone places would have been terrifying. Yet thanks largely to economic reforms, their annual growth rate has surged to around 7%. This year they will contribute half of the globe's GDP growth, measured at market exchange rates, over three times as much as America. In the past, emerging economies have often needed bailing out by the rich world. This time they could be the rescuers.

Of course, a recession in America would reduce emerging economies' exports, but they are less vulnerable than they used to be. America's importance as an engine of global growth has been exaggerated. Since 2000 its share of world imports has dropped from 19% to 14%. Its vast current-account deficit has started to shrink, meaning that America is no longer pulling along the rest of the world. Yet growth in emerging economies has quickened, partly thanks to demand at home. In the first half of this year the increase in consumer spending (in actual dollar terms) in China and India added more to global GDP growth than that in America.

Most emerging economies are in healthier shape than ever (see article). They are no longer financially dependent on the rest of the world, but have large foreign-exchange reserves—no less than three-quarters of the global total. Though there are some notable exceptions, most of them have small budget deficits (another change from the past), so they can boost spending to offset weaker exports if need be.

This does not mean emerging economies will grow fast enough to make up for the whole of a fall in America's output. Most of them will slow a bit next year: for instance, China's growth rate may dip to “only” 10%. So global growth will ease—which, after five years at an average of almost 5%, close to its fastest pace ever, it needs to do. But thanks to the vigour of the new titans, it will stay above its 30-year average of 3.5%.

A tale of two prices

The rising importance of the world's new giants will not only boost growth. It will also shift relative prices, notably those of oil and the dollar. And the consequences of this will be less comfortable for developed countries, especially America.

The oil price has risen mainly because of strong demand in emerging economies, which have accounted for as much as four-fifths of the total increase in oil consumption in the past five years. In past American recessions the oil price usually fell. This time it is likely to hold up. That will not only hurt the finances of Western consumers, but may also make the jobs of their central bankers harder, by combining inflationary pressure with economic slowdown.

The enfeebled dollar—lately in sight of $1.50 to the euro—would be weaker still without enormous purchases by central banks in emerging economies. This support is now waning. China and others are putting a smaller share of increases in reserves into the American currency. And Asian and Middle Eastern countries with currencies linked to the dollar are facing rising inflation, but falling American interest rates make it harder to tighten their own monetary policy. They may have to let their currencies rise against the sickly greenback, meaning they will need to buy fewer dollars. More important, as international investors wake up to the relative weakening of America's economic power, they will surely question why they hold the bulk of their wealth in dollars. The dollar's decline already amounts to the biggest default in history, having wiped far more off the value of foreigners' assets than any emerging market has ever done.

The vigour of emerging economies is good news for the world economy: for its growth, it has much less need of a strong America. The bad news for America is that this, in turn, may mean that the world also has less need of the dollar.

Kuwait Ditches Dollar

Kuwait Ditches Dollar

Lionel Laurent, 05.23.07, 5:20 PM ET

Americans may not understand their central bankers' seemingly morbid fascination with the threat of inflation, but Kuwaiti officials do. After four years of pegging the dinar to the sliding American dollar, the governor of the oil-rich emirate’s central bank declared on Sunday that he would opt for a basket of currencies instead, citing “inflationary pressure.”

Sheikh Salem Abdul-Aziz Al Sabah told the official Kuwait News Agency that the dollar’s decline relative to other currencies had “contributed to the increase in local inflation rates.” After a 0.4% increase against the dollar on Sunday, the dinar held steady on Monday.

The U.S. Federal Reserve has also frequently fretted about inflation, even while holding interest rates at 5.25%. Chairman Ben Bernanke has had trouble convincing regular Americans: a Bloomberg/ Los Angeles Times survey released last month showed that 60% of those polled actually predict a recession in the coming year.

But in the Arabian Gulf, prices have outpaced U.S. monetary policy. Inflation in Kuwait hit 5% in the first quarter of 2007, up from 3.9% in December 2006. High oil prices and comparatively low U.S. interest rates have contributed to upward pressures in the region.

Kuwait’s ditching of the dollar is one of a series of signs that the greenback’s decline is affecting its international primacy. In 2004, India and Japan declared their interest in diversifying their foreign currency reserves, and the following year China and Malaysia opted out of dollar pegs.

But the result could in fact be healthy for the American economy, even if it casts into doubt the planned fiscal and monetary harmonization of the six Gulf Cooperation Council countries by 2010. Although Saudi Arabia, Oman, Qatar, Bahrain and the United Arab Emirates have all stuck with the dollar peg, a shift away from the greenback could dent the current account surplus that represents 30% of the bloc’s gross domestic product.

“A declining dollar is one ingredient in a longer-term stabilization and reduction in the size of the U.S. trade deficit,” said Nigel Gault, an economist with the market analysis firm Global Insight.

Kuwait’s decision won’t redress the trade imbalance just yet: although it last year ran a current account surplus of $37 billion, only about 10% of the emirate’s imports come from the United States. And the new basket of currencies is likely to give the dollar a weighting of up to 80%.

But as part of the larger picture, the move away from the greenback towards other currencies was one step towards redressing the balance of imports and exports.

“It’s half the story,” said Global Insight’s Gault. “The rest of the story is slower growth in US spending. And hopefully faster growth in the rest of the world.”

Dollar Crisis: None dare call it 'conspiracy'

Dollar Crisis: None dare call it 'conspiracy'

by Hal Lindsey

Global Research, November 11, 2007

WorldNetDaily

Crude oil prices hit an all-time high this week, closing above $98 a barrel for the first time in history.

According to the AAA, many drivers in my home state of California are already paying more than $4 a gallon for regular unleaded gas. And in one town south of Big Sur, unleaded gas topped $5 a gallon.

The U.S. dollar is at an all-time low, even when compared against the hapless Canadian loonie. Five years ago, a loonie was worth 60 cents. Today, it's worth $1.12 and climbing.

Yesterday, WorldNetDaily reported that the Chinese are considering abandoning the U.S. dollar as their national reserve currency. WND quoted Craig Smith's assessment of the consequences of such a move by Beijing on our economy: "If that were to happen, all bets are off, and we will be in a depression that makes 1929 look like child's play, or we will experience Weimar Republic inflation as the dollar makes extreme moves toward devaluations."

On Tuesday, the U.S. national debt topped $9 trillion for the first time in history, according to the U.S. Treasury Department's daily accounting of the national debt. Nine trillion dollars! The number is so staggeringly high that it exceeds our ability to comprehend it in monetary units.

Million, billion, trillion – in financial terms, for most of us, it means a lot of money, really a lot of money, but that is about as specific a picture as most ordinary people can grasp.

Let's put all these "illions" into perspective. A million seconds is roughly 12 days, whereas a billion seconds is approximately 32 years.

We understand dollars. And we understand time. So it would take 12 days to pay back a million dollars at a dollar a second. But if you started right now, you'd pay back a BILLION dollars, at a dollar a second, in the year 2039.

A trillion seconds is roughly 32 thousand years. At a dollar a second, you'd pay back a TRILLION dollars in the year 34007.

The U.S. debt stands at $9 trillion. If my calculator is working, then at a dollar a second, the U.S. could be debt- free in the year 290007.

The point of that little exercise was two-fold. The first was to clarify the sheer volume of the debt; the second was to demonstrate the possibility that anybody in government really believes we can ever pay it off.

Each U.S. citizen's share of the national debt works out, according to the National Debt clock, to $29,947.50. That means the average American family of five owes, collectively, $149,737.50.

It also means that unless the average American family of five has a net worth of at least $149,737,50 in assets excluding liabilities (they don't), America is already bankrupt.

Over the past few years, there has been growing public concern about the emerging "Security and Prosperity Partnership" plan that some say is really a "deceptive roadmap" to a coming North American Union and a new, unified currency tentatively called the "amero."

The feds steadfastly deny such a plan exists, even as it opens the borders to Mexican truck traffic, widens the I-35 corridor from Mexico to Canada and, counterintuitively, refuses to tighten the borders with either Mexico or Canada, despite both logic and widespread public demand.

All of these things have brought me to believe that powerful forces outside of our government – like the shadowy international Money Trust members of the "Bilderberg Group" – made a decision to force the formation of the North American Union along with the amero. There decisions have been instituted in the past via the Trilateral Commission, which is the dba for the nefarious Conference on Foreign Relations. Destroying the American dollar could force the crisis that would force the creation of the North American Union. To quote the title of a book of the 1960s era, "None Dare Call It Conspiracy."

Ordinary Americans may not fully grasp just how dire the true economic picture is, but you can bet our leaders do. Yet from the White House to the Federal Reserve, nobody seems particularly eager to address the issue, preferring instead to talk about the "budget," as if the budget WERE the debt, rather than merely a measure of our ability to keep up with our payments on the debt.

It is almost as if they already have a Plan B in reserve, ready and waiting to be triumphantly introduced – just in the nick of time.

I wonder what it might be?

The Dollar Crisis

No matter how many warnings have been issued, an economic crisis always takes a country by surprise. The most urgent task is to somehow prevent policymakers from doing evil things to "correct" the crisis. Every form of intervention can only make matters worse. The best policy is to adopt a laissez-faire policy through regulatory cuts, sound money, and eliminating legal restrictions on trade. The liquidation must be allowed to happen on its own to provide a suitable foundation for a future recovery.

How can we help this happen? One way is to make sure that the right books are front and center. We might start by reviewing the great event that still inspires today's most fallacious countercyclical policies: the Great Depression.

It turns out that Ludwig von Mises was the great prophet of the event, with a series of essays on the nature of the business cycle and the urgency of sound money. After the Depression hit, he urged a free-market policy for the world. These wonderful essays are collected in The Causes of the Economic Crisis. It was a tragedy that it took so long for them to appear in English. What they show is that he, not Keynes, was the person who had it all figured out.

When I speak of a laissez-faire policy, many people's first reaction is: that's what Herbert Hoover did! But the truth is quite the opposite. Hoover was actually the first New Dealer. He tried to reflate the economy and attempted ill-fated jobs and spending programs. In fact, FDR's presidential campaign of 1932 argued that Hoover was a big spender who was driving up the debt and making matters worse through his intervention!

Never heard that before? Have a look at Murray Rothbard's America's Great Depression, which remains the best overall account of why the stock market crash happened and what Hoover did to make everything worse. Murray shows that the depression was not a crisis of capitalism but the result of a disastrously loose monetary policy in the 1920s. A special treat of this book is how Rothbard takes you through the theoretical underpinnings of the crisis, and shows precisely how the central bank distorts the structure of production and unbalances the relationship between consumption and investment.

Along the same lines, we need to understand that the Great Depression was hardly the first such crisis. In 1920 there was another, but it was resolved rather quickly because the government stayed out of the way. Moreover, banking panics occurred often in the 19^th century, and always because of the same factor: fractional-reserve banking backed by a lender of last resort. Counterfeiting comes to nothing but trouble. Rothbard reviews the whole of this history, complete with an accounting of every crooked banker and every power-mad politician, in A History of Money and Banking in the United States.

How serious do you want to get with your theoretical understanding? Do you find yourself tripped up by inflationists throwing intellectual curveballs? Maybe you should sit down with the great treatise on money and banking in our time: Money, Bank Credit, and Economic Cycles by Jesus Huerta de Soto.

Yes, it is long. Yes, it has apparatus. But the scholarship is wholly necessary for proving his radical thesis that fractional-reserve banking constitutes an intervention in the market economy and is the foundational reason for the business cycle. Through a close examination of microeconomic law and economy, he finds a link to macroeconomic effects. What we do in the micro-sphere echoes in the macro-sphere.

De Soto goes back to Roman law to show that bank deposits are rightly treated like other forms of property subject to the usual standards of fraud. He demonstrates how this standard was widely accepted until a change in outlook in the high Middle Ages, when special interests prevailed on legal regimes to have deposits treated as loans, with disastrous effects. The debate on this subject has been around for many decades, but no one has shed more light on this subject than De Soto. I fully expect that this book will continue to be mandatory reading for any banking scholar for decades ahead.

It is the thesis of L. Albert Hahn, another forgotten anti-Keynesian, that all excess money creates illusions of prosperity. He was once an advocate of Keynesian-style economic management, but he saw the error then wrote this fabulous and passionate attack on the whole theoretical and political apparatus. Mises was a big advocate of this book: The Economics of Illusion.

It doesn't say good things about our world where people in college read the Keynesians, are taught that they were right about free markets, but meanwhile truly great economists like Hahn are forgotten – forgotten so much, in fact, that this book has been out of print for many decades. The Mises Institute has made it available again. Isn't it time we revise our sense of what ideas deserve study, and what ideas deserve to truly drop down the memory hole?

Hahn was not alone among the great economic thinkers of this age. The New York Times employed one as its top editorialist: Henry Hazlitt. He warned constantly about the dangers of the dollar creation. His first great book against the Marshall Plan foreign aid was Will Dollars Save the World?

Then he turned his fire on the Bretton Woods agreement, and he was shot down for it – forced out. But who was right? The agreement broke down because it didn't allow dollar convertibility for American citizens.

Here you can read his analysis of not only Bretton Woods but the whole inflation issue: What You Should Know about Inflation. Here he lays out the entire issue: what is money, what it does, what government does to money, how the economy responds, what it means for your life, and what to do about it. Hazlitt of course advocated the gold standard.

Since Ron Paul has raised the issue of the gold standard, and is being treated like some kind of visitor from Mars for having mentioned the subject at all, we need to know more about the true American heritage of the gold standard. This is why I'm personally very fired up that the Mises Institute has brought back William Gouge's Short History of Money and Banking which I first read while working for Ron in his congressional office.

Gouge lived from 1796 through 1863 and was involved in all the great debates on banking in the 19^th century. His book is a major attack on all inflationary finance, and reading him underscores just how universal are the lessons on money and banking – universal in the sense that they apply in all times and all places.

Back in the 19^th century, there were many people who wanted inflation: bankers, debtors, and the government. What a surprise! Who has an interest in sound money? Consumers, savers, and liberty-loving citizens. This is the essential conflict. Are we going to have a monetary regime rooted in robbery, or one rooted in honesty? Gouge was on the side of honesty, and he inspires us today.

Coming a few decades later, but along the same lines, is Charles Holt Carroll's Organization of Debt Into Currency. This is one of those books that develops a hard-core cadre of fans. When we started reprinting these great American economic classics, people began to ask us: what about Carroll? Well, here it is, and once you get into the book, you realize why Rothbard and George Reisman and so many others swear by it. He patiently explains the difference between money and debt and how the government goes about sowing confusion about what is what.

Now, Ron Paul stands in this tradition of thinkers in every way. Even on the campaign stump, he speaks about the evil of fiat money and Fed management of the nation's money stock. In a true sense, he says, we've put a cartelized gang of central planners in charge of the good that constitutes half of every economic exchange, and we are paying the price in terms of declining purchasing power, exchange-rate chaos, rampant debt, and growing crises in sector after sector.

Is there a way out? Most certainly! It goes by the name of gold. Make the dollar as good as gold and you eliminate the inflation problem and the business cycles that go along with it. Here is the great secret of the gold standard. The problem is not that it is unviable from the perspective of economics. The problem is that there are many people allied against it: the big banks, the creditor class, and government. You see, gold would provide a hard-core anchor for liberty. Under the right form of the gold standard, government could no longer spend with impunity or run up debt without limit. The resources it spent would have to be raised the old-fashioned way.

It behooves every American to read Ron's book, really his manifesto on the topic. It is called The Case for Gold. He covers 19^th century monetary history and discusses several plans for instituting a gold standard. Note that I didn't say "going back" to a gold standard, because if you look at past gold standards, there was always a flaw in the form of government intervention. There was the crazy system called bimetallism. There was the lack of domestic convertibility after the New Deal. There were the guarantees in the form of central bank backing. There were special privileges in the law. The gold standard that Ron favors is not complicated: it is the one that would emerge in a world of freedom, a free-market money.

If his large book seems like too much, have a look at this primer: Gold, Peace, and Prosperity. You can read it in an hour. It explains why you should care about these issues, and why the government doesn't want you to care about them.

I never expected that in my lifetime, the money issue would again become central to politics, but Ron – inspired by Mises and Rothbard – has done it. And why not? The topic was huge in the 19^th century, when people understood the dangers of putting the government in charge of everything. Now we take the socialization of money and credit for granted. It is time we rethink all this. The restoration of sound money would be the greatest single stroke for liberty taken in 100 years.

November 9, 2007

Llewellyn H. Rockwell, Jr. [send him mail] is founder and president of the Ludwig von Mises Institute in Auburn, Alabama, editor of LewRockwell.com, and author of Speaking of Liberty.

The Real Reasons Why Iran is the Next Target

The Real Reasons Why Iran is the Next Target:


The Emerging Euro-denominated International Oil Marker
by William Clark
Oct. 27, 2004

The Iranians are about to commit an "offense" far greater than Saddam Hussein's conversion to the euro of Iraq’s oil exports in the fall of 2000. Numerous articles have revealed Pentagon planning for operations against Iran as early as 2005. While the publicly stated reasons will be over Iran's nuclear ambitions, there are unspoken macroeconomic drivers explaining the Real Reasons regarding the 2nd stage of petrodollar warfare - Iran's upcoming euro-based oil Bourse.

In 2005-2006, The Tehran government has a developed a plan to begin competing with New York's NYMEX and London's IPE with respect to international oil trades - using a euro-denominated international oil-trading mechanism. This means that without some form of US intervention, the euro is going to establish a firm foothold in the international oil trade. Given U.S. debt levels and the stated neoconservative project for U.S. global domination, Tehran's objective constitutes an obvious encroachment on U.S. dollar supremacy in the international oil market

"Of all the enemies to public liberty war is, perhaps, the most to be dreaded because it comprises and develops the germ of every other. War is the parent of armies; from these proceed debts and taxes...known instruments for bringing the many under the domination of the few. . . No nation could preserve its freedom in the midst of continual warfare."

- James Madison, Political Observations, 1795

Madison’s words of wisdom should be carefully considered by the American people and world community. The rapidly deteriorating situation on the ground in Iraq portends an even direr situation for American soldiers and the People of the world community - should the Bush administration pursue their strategy regarding Iran. Current geopolitical tensions between the United States and Iran extend beyond the publicly stated concerns regarding Iran’s nuclear intentions, and likely include a proposed Iranian "petroeuro system" for oil trade. Similar to the Iraq war, upcoming operations against Iran relate to the macroeconomics of the `petrodollar recycling’ and the unpublicized but real challenge to U.S. dollar supremacy from the euro as an alternative oil transaction currency.

It is now obvious the invasion of Iraq had less to do with any threat from Saddam’s long-gone WMD program and certainly less to do to do with fighting International terrorism than it has to do with gaining control over Iraq’s hydrocarbon reserves and in doing so maintaining the U.S. dollar as the monopoly currency for the critical international oil market. Throughout 2004 statements by former administration insiders revealed that the Bush/Cheney administration entered into office with the intention of toppling Saddam Hussein. Indeed, the neoconservative strategy of installing a pro-U.S. government in Baghdad along with multiple U.S. military bases was partly designed to thwart further momentum within OPEC towards a "petroeuro." However, subsequent events show this strategy to be fundamentally flawed, with Iran moving forward towards a petroeuro system for international oil trades, while Russia discusses this option.

Candidly stated, ‘Operation Iraqi Freedom’ was a war designed to install a pro-U.S. puppet in Iraq, establish multiple U.S military bases before the onset of Peak Oil, and to reconvert Iraq back to petrodollars while hoping to thwart further OPEC momentum towards the euro as an alternative oil transaction currency. [1] In 2003 the global community witnessed a combination of petrodollar warfare and oil depletion warfare. The majority of the world’s governments – especially the E.U., Russia and China - were not amused – and neither are the U.S. soldiers who are currently stationed in Iraq.

Indeed, the author’s original pre-war hypothesis was validated shortly after the war in a Financial Times article dated June 5^th, 2003, which confirmed Iraqi oil sales returning to the international markets were once again denominated in US dollars, not euros. Not surprisingly, this detail was never mentioned in the five US major media conglomerates who appear to censor this type of information, but confirmation of this vital fact provides insight into one of the crucial - yet overlooked - rationales for 2003 the Iraq war.

"The tender, for which bids are due by June 10, switches the transaction back to dollars -- the international currency of oil sales - despite the greenback's recent fall in value. Saddam Hussein in 2000 insisted Iraq's oil be sold for euros, a political move, but one that improved Iraq's recent earnings thanks to the rise in the value of the euro against the dollar." [2]

Unfortunately, it has become clear that yet another manufactured war, or some type of ill-advised covert operation is inevitable under President George W. Bush, should he win the 2004 Presidential Election. Numerous news reports over the past several months have revealed that the neoconservatives are quietly - but actively - planning for the second petrodollar war, this time against Iran.

"Deep in the Pentagon, admirals and generals are updating plans for possible U.S. military action in Syria and Iran. The Defense Department unit responsible for military planning for the two troublesome countries is "busier than ever," an administration official says. Some Bush advisers characterize the work as merely an effort to revise routine plans the Pentagon maintains for all contingencies in light of the Iraq war. More skittish bureaucrats say the updates are accompanied by a revived campaign by administration conservatives and neocons for more hard-line U.S. policies toward the countries"…"Even hard-liners acknowledge that given the U.S. military commitment in Iraq, a U.S. attack on either country would be an unlikely last resort; covert action of some kind is the favored route for Washington hard-liners who want regime change in Damascus and Tehran."

"…administration hawks are pinning their hopes on regime change in Tehran - by covert means, preferably, but by force of arms if necessary. Papers on the idea have circulated inside the administration, mostly labeled "draft" or "working draft" to evade congressional subpoena powers and the Freedom of Information Act. Informed sources say the memos echo the administration's abortive Iraq strategy: oust the existing regime, swiftly install a pro-U.S. government in its place (extracting the new regime's promise to renounce any nuclear ambitions) and get out. This daredevil scheme horrifies U.S. military leaders, and there's no evidence that it has won any backers at the cabinet level." [3]

To date, one of the more difficult technical obstacles concerning a euro-based oil transaction trading system is the lack of a euro-denominated oil pricing standard, or oil ‘marker’ as it is referred to in the industry. The three current oil markers are U.S. dollar denominated, which include the West Texas Intermediate crude (WTI), Norway Brent crude, and the UAE Dubai crude. However, since the spring of 2003, Iran has required payments in the euro currency for its European and Asian/ACU exports - although the oil pricing for trades are still denominated in the dollar. [4]

Therefore, a potentially significant news development was reported in June 2004 announcing Iran’s intentions to create of an Iranian oil Bourse. (The word "bourse" refers to a stock exchange for securities trading, and is derived from the French stock exchange in Paris, the Federation Internationale des Bourses de Valeurs.) This announcement portended competition would arise between the Iranian oil bourse and London’s International Petroleum Exchange (IPE), as well as the New York Mercantile Exchange (NYMEX). It should be noted that both the IPE and NYMEX are owned by U.S. corporations.

The macroeconomic implications of a successful Iranian Bourse are noteworthy. Considering that Iran has switched to the euro for its oil payments from E.U. and ACU customers, it would be logical to assume the proposed Iranian Bourse will usher in a fourth crude oil marker – denominated in the euro currency. Such a development would remove the main technical obstacle for a broad-based petroeuro system for international oil trades. From a purely economic and monetary perspective, a petroeuro system is a logical development given that the European Union imports more oil from OPEC producers than does the U.S., and the E.U. accounts for 45% of imports into the Middle East (2002 data).

Acknowledging that many of the oil contracts for Iran and Saudi Arabia are linked to the United Kingdom’s Brent crude marker, the Iranian bourse could create a significant shift in the flow of international commerce into the Middle East. If Iran’s bourse becomes a successful alternative for oil trades, it would challenge the hegemony currently enjoyed by the financial centers in both London (IPE) and New York (NYMEX), a factor not overlooked in the following article:

"Iran is to launch an oil trading market for Middle East and OPEC producers that could threaten the supremacy of London's International Petroleum Exchange."

"…He [Mr. Asemipour] played down the dangers that the new exchange could eventually pose for the IPE or Nymex, saying he hoped they might be able to cooperate in some way."

"…Some industry experts have warned the Iranians and other OPEC producers that western exchanges are controlled by big financial and oil corporations, which have a vested interest in market volatility.

The IPE, bought in 2001 by a consortium that includes BP, Goldman Sachs and Morgan Stanley, was unwilling to discuss the Iranian move yesterday. "We would not have any comment to make on it at this stage," said an IPE spokeswoman. "[5]

It is unclear at the time of writing, if this project will be successful, or could it prompt overt or covert U.S. interventions - thereby signaling the second phase of petrodollar warfare in the Middle East. News articles in June 2004 revealed the discredited neoconservative sycophant Ahmed Chalabi may have revealed his knowledge to Iran regarding U.S. military planning for operations against that nation.

"The reason for the US breakup with Ahmed Chalabi, the Shiite Iraqi politician, could be his leak of Pentagon plans to invade Iran before Christmas 2005, but the American government has not changed its objective, and the attack could happen earlier if president George W. Bush is re-elected, or later if John Kerry is sworn in."

"….Diplomats said Chalabi was alerted to the Pentagon plans and in the process of trying to learn more to tell the Iranians, he invited suspicions of US officials, who subsequently got the Iraqi police to raid the compound of his Iraqi National Congress on 20 May 2004, leading to a final break up of relations."

"While the US is uncertain how much of the attack plans were leaked to Iran, it could change some of the invasion tactics, but the broad parameters would be kept intact." [6]

Regardless of the potential U.S. response to an Iranian petroeuro system, the emergence of an oil exchange market in the Middle East is not entirely surprising given the domestic peaking and decline of oil exports in the U.S. and U.K, in comparison to the remaining oil reserves in Iran, Iraq and Saudi Arabia. According to Mohammad Javad Asemipour, an advisor to Iran’s oil ministry and the individual responsible for this project, this new oil exchange is scheduled to begin oil trading in March 2005.

"Asemipour said the platform should be trading crude, natural gas and petrochemicals by the start of the new Iranian year, which falls on March 21, 2005.

He said other members of the Organization of Petroleum Exporting Countries - Iran is the producer group's second-largest producer behind Saudi Arabia - as well as oil producers from the Caspian region would eventually participate in the exchange." [7]

(Note: the most recent Iranian news report from October 5, 2004 stated: "Iran's oil bourse will start trading by early 2006" which suggests a delay from the original March 21, 2005 target date). [8] Additionally, according to the following report, Saudi investors may be interested in participating in the Iranian oil exchange market, further illustrating why petrodollar hegemony is becoming unsustainable.

"Chris Cook, who previously worked for the IPE and now offers consultancy services to markets through Partnerships Consulting LLP in London, commented: "Post-9/11, there has also been an interest in the project from the Saudis, who weren't interested in participating before."

"Others familiar with Iran's economy said since 9/11, Saudi Arabian investors are opting to invest in Iran rather than traditional western markets as the kingdom's relations with the U.S. have weakened Iran's oil ministry has made no secret of its eagerness to attract much needed foreign investment in its energy sector and broaden its choice of oil buyers."

"…Along with several other members of OPEC, Iranian oil officials believe crude trading on the New York Mercantile Exchange and the IPE is controlled by the oil majors and big financial companies, who benefit from market volatility."[9]

One of the Federal Reserve’s nightmares may begin to unfold in 2005 or 2006, when it appears international buyers will have a choice of buying a barrel of oil for $50 dollars on the NYMEX and IPE - or purchase a barrel of oil for €37 - €40 euros via the Iranian Bourse. This assumes the euro maintains its current 20-25% appreciated value relative to the dollar - and assumes that some sort of "intervention" is not undertaken against Iran. The upcoming bourse will introduce petrodollar versus petroeuro currency hedging, and fundamentally new dynamics to the biggest market in the world - global oil and gas trades

During an important speech in April 2002, Mr. Javad Yarjani, an OPEC executive, described three pivotal events that would facilitate an OPEC transition to euros. [10] He stated this would be based on (1) if and when Norway's Brent crude is re-dominated in euros, (2) if and when the U.K. adopts the euro, and (3) whether or not the euro gains parity valuation relative to the dollar, and the EU’s proposed expansion plans were successful. (Note: Both of the later two criteria have transpired: the euro’s valuation has been above the dollar since late 2002, and the euro-based E.U. enlarged in May 2004 from 12 to 22 countries). In the meantime, the United Kingdom remains uncomfortably juxtaposed between the financial interests of the U.S. banking nexus (New York/Washington) and the E.U. financial centers (Paris/Frankfurt).

The implementation of the proposed Iranian oil Bourse (exchange) in 2005/2006 – if successful in utilizing the euro as its oil transaction currency standard – essentially negates the necessity of the previous two criteria as described by Mr. Yarjani regarding the solidification of a "petroeuro" system for international oil trades. [10] It should also be noted that during 2003-2004 Russia and China have both increased their central bank holdings of the euro currency, which appears to be a coordinated move to facilitate the anticipated ascendance of the euro as a second World Reserve currency. [11] [12] In the meantime, the United Kingdom is uncomfortable juxtaposed between the financial interests of the U.S. (New York/Washington) banking nexus and that of the E.U. financial center (Paris/Frankfurt).

The immediate question for Americans? Will the neoconservatives attempt to intervene covertly and/or overtly in Iran during 2005 in an effort to prevent the formation of a euro-denominated crude oil pricing mechanism? Commentators in India are quite correct in their assessment that a U.S. intervention in Iran is likely to prove disastrous for the United States, making matters much worse regarding international terrorism, not to the mention potential effects on the U.S. economy.

"The giving up on the terror war while Iran invasion plans are drawn up makes no sense, especially since the previous invasion and current occupation of Iraq has further fuelled Al-Qaeda terrorism after 9/11."

"…It is obvious that sucked into Iraq, the US has limited military manpower left to combat the Al-Qaeda elsewhere in the Middle East and South Central Asia,"…"and NATO is so seriously cross with America that it hesitates to provides troops in Iraq, and no other country is willing to bail out America outside its immediate allies like Britain, Italy, Australia and Japan."

"….If it [U.S.] intervenes again, it is absolutely certain it will not be able to improve the situation – Iraq shows America has not the depth or patience to create a new civil society – and will only make matters worse."

"There is a better way, as the constructive engagement of Libya’s Colonel Muammar Gaddafi has shown…."Iran is obviously a more complex case than Libya, because power resides in the clergy, and Iran has not been entirely transparent about its nuclear programme, but the sensible way is to take it gently, and nudge it to moderation. Regime change will only worsen global Islamist terror, and in any case, Saudi Arabia is a fitter case for democratic intervention, if at all." [13]

It is abundantly clear that a 2^nd Bush term will bring a confrontation and possible war with Iran during 2005. Colin Powell as the Secretary of the State, has moderated neoconservative military designs regarding Iran, but Powell has stated that he will be leaving at the end of Bush’s first term. Of course if John Kerry wins in November, he might pursue a similar military strategy. However, it is my opinion that Kerry is more likely to pursue multilateral negotiations regarding the Iranian issues.

Clearly, there are numerous risks regarding neoconservative strategy towards Iran. First, unlike Iraq, Iran has a robust military capability. Secondly, a repeat of any "Shock and Awe" tactics is not advisable given that Iran has installed sophisticated anti-ship missiles on the Island of Abu Musa, and therefore controls the critical Strait of Hormuz. [14] In the case of a U.S. attack, a shut down of the Strait of Hormuz – where all of the Persian Gulf bound oil tankers must pass – could easily trigger a market panic with oil prices skyrocketing to $100 per barrel or more. World oil production is now flat out, and a major interruption would escalate oil prices to a level that would set off a global Depression. Why are the neoconservatives willing to takes such risks? Simply stated - their goal is U.S. global domination.

A successful Iranian bourse would solidify the petroeuro as an alternative oil transaction currency, and thereby end the petrodollar's hegemonic status as the monopoly oil currency. Therefore, a graduated approach is needed to avoid precipitous U.S. economic dislocations. Multilateral compromise with the EU and OPEC regarding oil currency is certainly preferable to an ‘Operation Iranian Freedom,’ or perhaps an attempted CIA-sponsored repeat of the 1953 Iranian coup – operation "Ajax" part II. [15] Indeed, there are very good reasons for U.S. military leaders to be "horrified" at the thought of a second Bush term in which Cheney and the neoconservatives would be unrestrained in their tragic pursuit of U.S. global domination.

"NEWSWEEK has learned that the CIA and DIA have war-gamed the likely consequences of a U.S. pre-emptive strike on Iran's nuclear facilities. No one liked the outcome. As an Air Force source tells it, "The war games were unsuccessful at preventing the conflict from escalating." [16]

Despite the impressive power of the U.S. military and the ability of our intelligence agencies to facilitate "interventions," it would be perilous and possibly ruinous for the U.S to intervene in Iran given the dire situation in Iraq. The Monterey Institute of International Studies provided an extensive analysis of the possible consequences of a preemptive attack on Iran’s nuclear facilities and warned of the following:

"Considering the extensive financial and national policy investment Iran has committed to its nuclear projects, it is almost certain that an attack by Israel or the United States would result in immediate retaliation. A likely scenario includes an immediate Iranian missile counterattack on Israel and U.S. bases in the Gulf, followed by a very serious effort to destabilize Iraq and foment all-out confrontation between the United States and Iraq's Shi'i majority. Iran could also opt to destabilize Saudi Arabia and other Gulf states with a significant Shi'i population, and induce Lebanese Hizbullah to launch a series of rocket attacks on Northern Israel."

"…An attack on Iranian nuclear facilities…could have various adverse effects on U.S. interests in the Middle East and the world. Most important, in the absence of evidence of an Iranian illegal nuclear program, an attack on Iran's nuclear facilities by the U.S. or Israel would be likely to strengthen Iran's international stature and reduce the threat of international sanctions against Iran. Such an event is more likely to embolden and expand Iran's nuclear aspirations and capabilities in the long term"…"one thing is for certain, it would not be just another Osirak. " [17]

Synopsis

Regardless of whatever choice the U.S. electorate makes in the upcoming Presidential Election a military expedition may still go ahead.

This essay was written out of my own patriotic duty in an effort to inform Americans of the challenges that lie ahead. On November 25, 2004, the issues involving Iran's nuclear program will be addressed by the International Atomic Energy Agency (IAEA), and possibly referred to the U.N. Security Council if the results are unsatisfactory. Regardless of the IAEA findings, it appears increasingly likely the U.S. will use the specter of nuclear weapon proliferation as a pretext for an intervention, similar to the fears invoked in the previous WMD campaign regarding Iraq.

Pentagon sources confirm the Bush administration could undertake a desperate military strategy to thwart Iran’s nuclear ambitions while simultaneously attempting to prevent the Iranian oil Bourse from initiating a euro-based system for oil trades. The later would require forced "regime change" and the U.S. occupation of Iran. Obviously this would require a military draft. Objectively speaking, the post-war debacle in Iraq has clearly shown that such Imperial policies will be a catastrophic failure. Alternatively, perhaps a more enlightened U.S. administration could undertake multilateral negotiations with the EU and OPEC regarding a dual oil-currency system, in conjunction with global monetary reform. Either way, U.S. policy makers will soon face two difficult choices: monetary compromise or continued petrodollar warfare.

"I am a firm believer in the people. If given the truth, they can be depended upon to meet any national crisis. The great point is to bring them the real facts."

- Abraham Lincoln

"Whenever the people are well-informed, they can be trusted with their own government. Whenever things get so far wrong as to attract their notice, they may be relied on to set them to rights."

- Thomas Jefferson

Source here.

Dollar dropped in Iran asset move

Dollar dropped in Iran asset move

Iran is to shift its foreign currency reserves from dollar to euro and use the euro for oil deals in response to US-led pressure on its economy.

In a widely expected move, Tehran said it would use the euro for all future commercial transactions overseas.

The US, which accuses Tehran of supporting terrorism and trying to obtain nuclear weapons, has sought to limit the flow of dollars into Iran.

It wants the United Nations Security Council to impose sanctions on Iran.

Dollar squeeze

Analysts said Tehran had been steadily shifting its foreign-held assets out of dollars since 2003 and that Monday's announcement was unlikely to affect the value of the dollar, which has weakened significantly in recent months.

There will be no reliance on dollars Gholam-Hussein Elham, Iranian spokesman

An Iranian spokesman said all its foreign exchange transactions would be conducted in euros and its national budget would also be calculated in euros as well as its own currency.

"There will be no reliance on dollars," said Gholam-Hussein Elham.

"This change is already being made in the currency reserves abroad."

The currency move will apply to oil sales although it is expected that Iran, the world's fourth largest oil producer, will still accept oil payments in dollars.

Nuclear trigger

Washington has sought to exert financial pressure on Iran, which it accuses of flouting international law by trying to acquire nuclear weapons.

Tehran denies this, saying its nuclear research is for purely geared towards civilian uses.

Most international banks have stopped dollar transactions with Iran and some firms have ceased trading with Iran altogether in anticipation of possible future sanctions.

The dollar slipped slightly against the euro in New York trading although analysts said they did not expect the reaction to be too severe.

"It is something they have been saying they are going to do for quite a long time now, so I wouldn't expect any market reaction," said Ian Stannard, an economist with BNP Paribas.

The BBC's Tehran correspondent Frances Harrison said Iranian businessmen were complaining about delays in securing letters of credit and saw current conditions as a prelude to the imposition of sanctions.

Tehran has urged Iranian businesses to open letters of credit in euros in the future.

Source here.

U.S. dollar 'worthless': Iran drops dollar from oil deals

Iran prsident calls the U.S. dollar 'wothless" and drops the dollar from all of Iran's oil deals.

The dollar, already down sharply this past year, now potentially faces one of its greatest threats. Will Iran, the 2nd largest oil producer the Middle East, be just the first to drop to the dollar or will there be others joining the dollar dump? Although Iran has been building up to this for the past few years (and also plan to take it one step beyond...see story here) there has been little mention of this on the mass media. Somthing potential so powerful as to touch, and hurt, every American life, as well send shock waves throughout the world, why is there so little media coverage. Think about it.

Harry


TEHRAN (AFP) — Major crude producer Iran has completely stopped carrying out its oil transactions in dollars, Oil Minister Gholam Hossein Nozari said on Saturday, labelling the greenback an "unreliable" currency.
"At the moment, selling oil in dollars has been completely halted, in line with the policy of selling crude in non-dollar currencies," Nozari was quoted as saying by the ISNA news agency.
"The dollar is an unreliable currency, considering its devaluation and the oil exporters' losses," he added.
The world's fourth largest oil exporter, Iran has massively reduced its dependence on the dollar over the past year in the face of US pressures on its financial system and the fall in the dollar.
Nozari did not specify in which currencies Iran was now being paid. In the past, officials have said most oil income was in euros, with a significant percentage in yen.
Japan, which purchases 20 percent of Iran's crude oil, has recently agreed to pay for the crude oil in yen, officials have said. The UAE dirham has also been mooted as a possible payment currency.
Iran has in the past months been whittling down the proportion of dollars in its oil revenue income. Officials in October said that dollars accounted for only 15 percent of payments and predicted the amount would fall to zero.
However, the oil income is still being booked in dollars.
The United States has in recent months successfully encouraged major European and Asian banks to cut their dealings with Iran in a bid to make the Islamic republic give way on its controversial nuclear programme.
Washington has also blacklisted major Iranian banks for alleged support of terrorism and seeking nuclear weapons, charges denied by Tehran.
Iran has also reduced its dollar assets held in foreign banks and urged OPEC to take collective action to price oil in other currencies such as the euro, instead of the US currency which is used across the world at present.
The fall of the dollar, which has weakened considerably against the euro and other currencies in the past 12 months, has affected the revenues of OPEC members because most of them price and sell their oil exports in the US currency. Source here.