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Even if all oil were sold for dollars, it would be a very small factor in the international demand for dollars, as can be seen with a bit of simple arithmetic.
...it means that oil consumers would have to collectively hold $4.2 billion to cover their daily oil tab.

By comparison, China alone holds more than $1 trillion in currency reserves, more than 200 times the transaction demand for oil. In other words, if China reduced its holdings of dollars by just 0.5 percent, it would have more impact on the demand for dollars than if all oil exporters suddenly stopped accepting dollars for their oil.

His comment about the oil being a virtual drop in the actual dollar bucket by comparing it with a one time reduction of China's holdings is a little specious. If one is going to pshaw a daily removal of oil dollars taken out of the Forex equation, then one must consider the daily reduction of China's holdings; that is lot of 1/2 percent daily drops. Two months is a quarter trillion dollars.

Leaving the US will only continue to get more expensive...most arguably correct. The question is for how long. And for how long will living in the US be expensive - lowering of income, raising of prices even within the borders?

Never underestimate their intelligence, always underestimate their knowledge.

Frank Delaney ~ Ireland

by siegestate (siegestate or beyondwarispeace.com) on Thu Oct 8th, 2009 at 09:20:04 AM EST

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