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This article was nominated for deletion on 8 March 2006. The result of the discussion was no consensus.

This article was nominated for deletion on 29 May 2006. The result of the discussion was no consensus.

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Contents 1 Cleanup 1.1 basis of fiat currency 1.2 Google Hits 1.3 Fiat money 1.4 Deletion ? 1.5 Alternate names 1.6 Response to Fiat Money and A Glaring Ommission 1.7 Title change 1.8 Major Problems 1.9 Important subject 1.10 Oil price stability 1.11 this is not right is it? 1.12 Possible page move and significant re-write

[edit] Cleanup

The facts in this article need to be linked to the hypothesis. The M3 section and its connection to the petrodollar warfare hypothesis need to be explained. To be honest the whole thing smells of a crank page. I'm wary of publishing the theory of one individual, published or not, but since he's a prof at Johns Hopkins at least he's not a crank. Or at least not an obvious one.

--Mmx1 22:13, 22 February 2006 (UTC)

The "Facts" in this article are so poorly written they cause the reader to question their validity.

I think this should be deleted. Professor or no, this theory only gets 859 google hits, and little of it is notable. I don't think it's a "crank" theory but I don't think it's especially notable. This seems like a vanity page to showcase someone's research (though it is so poorly written as to suggest it probably wasn't the work of the author showcased). Anyone think of any reason this shouldn't be AfD'd?--csloat 10:04, 1 March 2006 (UTC)

---

The phrasing and presentation of this article could certainly be improved, but this is a very important theory which is not at all beyond the pale. The link which quotes from Rep. Ron Paul, M.D.'s recent speech is especially insightful. When the lone Libertarian-Republican in Congress has his thoughts endorsed by a site like antiwar.com, you couldn't ask for a better example of the kind of non-mainstream NPOV for which Wikipedia is the ideal setting.

From Rep. Paul's Feb. 17, 2006 speech:

"Concern for pricing oil only in dollars helps explain our willingness to drop everything and teach Saddam Hussein a lesson for his defiance in demanding Euros for oil.

And once again there’s this urgent call for sanctions and threats of force against Iran at the precise time Iran is opening a new oil exchange with all transactions in Euros.

Using force to compel people to accept money without real value can only work in the short run. It ultimately leads to economic dislocation, both domestic and international, and always ends with a price to be paid."

(Rep. Paul also notes that the US-backed attempted coup to depose Hugo Chavez also happened a few months after Chavez threatened to sell oil for Euros.) So the core of the petrodollar warfare thesis has been clearly and recently propounded by a US Congressman speaking from the house floor.

Other links from the Petrodollar warfare article show that the essential economic underpinnings and assumptions of the theory are presented as straight economic history on the IMF website.

This article needs to stay. -Enon Harris --67.106.223.30 16:11, 1 March 2006 (UTC)

I'm sorry, can you point to where Rep. Paul uses the phrase "petrodollar warfare"?-csloat 21:39, 1 March 2006 (UTC)

[edit] basis of fiat currency

From the facts section, I removed this controversial, theoretical statement:

the only thing backing it is faith and the fact that key energy commodities are denominated in it.

I replaced it with a statement that there is no explicit connection between the dollar's value and that of any commodity. AdamRetchless 15:58, 26 February 2006 (UTC)

[edit] Google Hits

If you try "petrodollar warfare" you get 29 700 hits: [[1]]

That is more substantial, but most seem to be ads for the book and blog mentions. Hits on google web searches can be misleading because discussions among bloggers are seen as significant as peer reviewed scientific research and articles published in actual news sources. I went to lexis/nexis and did the same search -- I searched full text for all available dates for "petrodollar warfare" in major papers, then in all news transcripts, then in all wire reports, for all available dates, and did not come up with a single citation for an article mentioning that phrase. Not one. A search of EBSCOHost for academic journals found not a single use of the phrase. A google search of books mentioning the phrase returns nothing. The only result on Google scholar is a link to an essay by Clark posted to a site called "ratville times." This looks like a vanity page for a young scholar, pure and simple. I have a friend at Emory who wrote a book that included the phrase "stochastic hiccoughs" -- should I get started on the stochastic hiccoughs page?--csloat 00:28, 2 March 2006 (UTC)

[edit] Fiat money

Every fiat money system (which is not backed by commodity like the gold system) is in essence based on faith that others deem it as valuable to keep it going. Obviously the more players you have tied into the monetary system - in US case the whole world - the harder is to get out of it. But when it comes down in will not fall lightly.

Alan Oldfield 21:56 01 March 2006 [GMT+2]

and your point is....? --Dcfleck 16:22, 11 March 2006 (UTC)

it is a response to AdamRetchless edit

   The value of fiat money is driven by demand for cash balances to settle payment.  For  
   example, one component is that we have to pay taxes with dollars.  Another component is 
   international trade, for which countries hold some amount of the currencies of their trading 
   partners.  Why wouldn't dollar balances necessary for oil payments affect the value of the 
   dollar?

There is a recent lecture given by John Nash that is somehow tied to this discussion. Google "Nash, ideal money" and you will see what I am talking about. I think the petrodollar warfare is misleading in the sense that it is not a warfare. Many countries have embedded interest in the dollar's value. For example, if Japan switch 50% of its dollars into Euros, the dollar would get hit so hard that Japan would lose a lot because of the dollars it would still have.

The point that Nash makes is that since money is not pegged to a real commodity, politicians that he labels "keynesians" (he is careful to define what he means by that, since Keynes contributed a vast number of ideas) have an incentive to just "print money." He suggests that if there are n strong currencies that are perfectly transfarable, then there is no need to "peg" them to anything. The market he says, will make them keep their inflation (money printing) at a minimum. Thus, I would say that this article defenetly needs some cleaning, but the information it contains can be relevant to the theory of money. Basically, instead of saying, let do Euros, we should say, lets use a little of everything. I will see if I can make time to contribute to this article with more neutral language.

The basis of credibility lies not in the volume of repetition over the internet. This is a niche topic that highlights an importent dynamic of today's world economy and deserves to be further expanded. After reading the book, the reader is left with more than enough sources to continue investigation into the matter. If wiki editors are interested in the validity of this article (well-written or not) I suggest they forgot google searches, crack open the actual book, and read the sources for themselves.

[edit] Deletion ?

According to official data there is 11 days until the opening of the Iranian Oil Bourse - wouldn't it be prudent to wait until we see how it plays out (and then rewriting the article) than to delete it before that date.

Alan Oldfield 09. March 2006 [GMT+2]

No - if there is anything to write about that it can be written on the article where it is relevant -- Iranian Oil Bourse. There is still no need for Wikipedia to showcase pseudoacademic work that is not otherwise notable.--csloat 18:02, 9 March 2006 (UTC)

User Dave Thompson 23 May 2006: Why shut down debate? This is indeed very notable work, as is evidence by the news and by participation in these discussions. And as to whether it is "pseudoacademic", well, that is in the eye of the beholder. I don't think Wikipedia should be deleting entries because some people disagree with some of the views in them. If you don't like the views, provide your own.

I point you to my point below regarding China. Furthermore, there is well documented displeasure in America regarding the most unofficial use of the dollar as a psuedo currency in many developing nations. While many nations have officially dollarised, it is opposed by the US policy makers due to the inflationary impact. Why does this crackpot theory not dominate in these economic situations?

   Please, tell me how the dollarisation of other countries causes inflation.  Let's say there
   are 50 dollars in the world, and ecuador dollarises & takes 1/2 of them.  That leaves the
   US with only 25 dollars, effectively reducing the domestic money supply & causing deflation.
   I't's only inflationary if we print dollars to accomodate such countries.

I have never heard of such displeasure. Can anyone point somewhere? (the one thing I see has more to do with illegal practices then legal ones.) I mean, if the entire world decided to adopt the dollar as its currency, I think Washington would benefit. Imagine, they would be able to charge an inflation tax on all citizens of the world. I study this stuff, so if you show me how I am wrong, I had be very thankful since I would have learned something new.

84.9.110.163 10:50, 29 May 2006 (UTC)

[edit] Alternate names

List of different names this theory has been called in medias, that we could rename article to: A human 03:21, 11 March 2006 (UTC)

• Petrodollar warfare coined by William Clark and used as title in his book.
• The Bourse Conspiracy coined by Russ Wellen in a Baltimore Chronicle article.
• Oil currency wars
• Petrodollar cycle

[edit] Response to Fiat Money and A Glaring Ommission

In my opinion, the point about fiat money is largely a platitude, nor important in substantiating the theory.

Most if not all currencies are in the form of fiat money (whether they be convertible or not to a commodity). Even in the century from 1800 to 1900, Triffin identified that 95% of new money creation on the European continent was in the form of credit or fiat money - a period largely claimed to be dominated by the Gold or Bi-metallic standard and exchange rate stability.

The principle of accepting the value of fiat money is now engrained in our culture, and moreover backed up by the fact that the currency is "legal tender". I.e. it is illegal not to accept the money in settlement of a debt or other contract.

My point is, that this article is misleading in how it presents the link between the physical fiat money and its value as being weak, when in fact it very strong, nor would it be any stronger if it were convertible to a commodity.

If anything this article should focus on whether the currency is MIS-valued, or will receive a SHOCK to its value as a result of exogenous impacts. To play devil's advocate, if the dollar were freely convertible to gold or some other commodity, and the dollar took a hit in value (say to a fall in international reserve holdings), the dollar would still suffer. The economy would shift from the dollar to gold, in an exact parrellel of a shift from the dollar to another currency.

If we went even further to suggest that the US issue actual gold coins, the theory states that in order to maintain parity, the money supply must vary with the balance of payments. If gold is over-valued at the mint (i.e. there is a reduction in demand for the gold dollar, and the nominal value of gold is greater than that of the domestic currency exchange value) then you will still get a flight of capital from the US, and instead of a shift in currency values (since the gold price is essentially fixed) it would be prices of good that went through the roof instead.

Ultimately, this argument that the a currency is somehow flimsy, and more vulnerable as a result of being a fiat currency is ridiculous. No system of currency could protect against the shocks described in this article.

A GLARING OMMISSION in the argument

A signification topic for debate among American economists is the issue of China's currency dealings. Greenspan himself has critisized China's maintainance of an undervalued currency versus the dollar.

How do they achieve this? By buying as many dollars as they can get their hands on, and selling their domestic currency.

Ultimately....why would an administration hell bent on protecting its domestic currency from losing its value through a fall in foriegn holdings, so openly critisize and condemn the policy which results in the largest foriegn, non-utilised stock of dollars on the planet.

This theory is....largely, rubbish in my opinion, poorly argued, lacking in decent evidence, with extremely tenuous links and furthermore is incredibly short sighted.

It is unencyclopedic, and more importantly, actively misleading and should be removed.

84.9.110.163 10:23, 29 May 2006 (UTC) (London School of Economics BSc Econ Graduate)

[edit] Title change

I would suggest to retitle this article to something like Petrocurrency wars, and change its contents accordingly to focuse on the possible competition between petrocurrencies. There are already two more petrocurrency candidates, these are: the petroeuro and the petroruble. --tequendamia 11:58, 29 May 2006 (UTC)

[edit] Major Problems

Holy POV, batman. I've never seen an article that has had so much work on it be in such bad shape. This is just a string of nonsense conspiracy theories. Any idea that this is supported by reputable economists is just ludicrous, yet the pro links outnumber the antis by three-to-one. This article could have focus if it were about Clark's book, but nPOV would dictate that we mention that his theories were rejected by most economists. --JChap 00:21, 30 May 2006 (UTC)

the problem of wikipedianing is exactly this... nevertheless, it is a very interesting theory that should be deeply studied. The inflation of the dollar becomes in this sense one of the most important taxes in the world, and the dollar HAS devaluated a lot since 2000 until 2004. But what is important is the accumulation of capital that the petro-dollar (and the so-called asian-dollar too) involves. The collapse of this system and its substitution for a petro-euro, even if just in half, could contribute to the fall of the american economy.

[edit] Important subject

There is no way this article should be deleted. If it is true - and I believe it is - then we are on a cusp of a big economic change comparable to that of 1945 when the $ became the world's currency. If or when the Euro replaces the $ in the same way the implications are huge. The USA is only able to run at such a collosal defecit because the world wants $s to buy oil. Price oil in Euros and everything changes. I believe that that USA has already invaded one country - Iraq - because they were pricing oil in Euros. I will add some links on this later.SmokeyTheCat 11:02, 29 January 2007 (UTC)

[edit] Oil price stability

I don't think it can be said that the pricing of oil in dollars implies that dollar oil prices must necessarily be more stable than oil prices in another currency. In the last few years, for example, the rising value of the euro has partially offset the rising oil price (in US dollars), so we have actually had more stable oil prices in Europe than there have been in the USA, or in countries whose exchange rates are tied to the US dollar.

Another point in this theory which is quite strange is the notion that having persistent trade and balance-of-payments deficits is something the US government actually strives for, rather than a problem, which is how most see it. Moreover, both the UK and Australia (amongst others) have tended to run rather large current account deficits, despite the fact that oil is not priced in sterling or Australian dollars. This goes against the idea that it is the 'petrocurrency' nature of the US dollar which allows its persistent current account deficits to exist, which also ignores a potential causal link from the capital account (the direction of this relationship is a matter of some debate).

Finally, the entire theory is in many respects backwards. The dollar has been the most important global reserve currency because the American economy has been the largest and most important. The economy of the euro zone, as the world's second largest (the EU economy is the world's largest, but not all member states have adopted the euro), is now a viable alternative, hence there is a possibility of using the euro as a reserve currency, or to price commodities, which did not exist before 1999. (China's economy is very large in PPP terms, but in exchange rate terms, which is what matters here, it is still smaller than the economy of Germany alone.) --Shalineth 14:02, 27 April 2007 (UTC)

Its true that the euro's rise has somewhat insulated euroland from oilprice increases, but it could just as well work in reverse, as it did for example in the year 2000. In theory, the US should see more stable oil prices because they don't need to worry about a "double" hit of a falling currency and rising oil prices, whereas everyone else does. Does not always work out, but averaging over time it should be true. As to the rest of your argument, I think that its a matter of degree... the US can sustain a larger deficit than they otherwise could. Also, I think that many economists agree with you. This theory overstates the benefits of "petrocurrency". Peregrine981 03:45, 28 April 2007 (UTC)

The risk of a 'double hit', as you say, is accompanied by the risk of a 'half hit', i.e. that a rise in oil prices will be accompanied by an appreciation of the currency. Any claim of greater price stability for US buyers of oil rests on the assumption that there is positive covariance between the oil price and the value of the US dollar. --Shalineth 03:37, 4 May 2007 (UTC)

[edit] this is not right is it?

--Dedwolfen (talk) 07:34, 28 November 2007 (UTC)

i thought the call was for china not to peg the yuan to the dollar. why would Bush want to radically devalue the dollar? China has massive reserves.

"Opponents also sometimes point out that the Bush administration has repeatedly called for China to stop propping up the dollar by holding very large dollar reserves, a stance seemingly at odds with the administration's supposed overriding interest in maintaining a strong dollar.[citation needed]"

[edit] Possible page move and significant re-write

Has any unambiguously major mainstream or even centerish-left political group or economic authority accepted, promoted, or even mentioned this theory? If not, it may be appropriate to delete this and merge all of its content to either William R. Clark (author) or significantly re-write the article to be about Petrodollar Warfare the book and include a section on quite what the hypothesis is, who has supported or mentioned it, and the like. To do otherwise would give undue weight to the theory, implying wider acceptance than actually exists. If such groups exist, however, they should be added, with citations. Right now, the impression the article gives is of overweighting the notion.-Toptomcat (talk)