In 2009, Colonel Gaddafi, then President of the African Union, suggested to the States of the African continent to switch to a new currency, independent of the American dollar: the gold dinar.
The objective of this new currency was to divert oil revenues towards state-controlled funds rather than American banks. In other words, to stop using the dollar for oil transactions. Countries such as Nigeria, Tunisia, Egypt and Angola were ready to change their currencies.
With an excellent management of oil revenues, the Libyan state had managed to store hundreds of tons of gold (143 tons according to WikiLeaks) and the same amount in silver. All these resources were going to make Libya the most influential country in Africa, supplanting France for example.
Gaddafi wanted to avoid American influence in his oil transactions by using this gold. He launched the gold dinar project, and other major African governments were ready to support him in this project. It was both an African dream and a nightmare for the West’s financial system
The US dollar has long reigned as the dominant currency for trade, investment & reserves in the world. How would the gold dinar affect the US dollar role as the world’s reserve currency. What would you rather have in your wallet? A currency backed by gold or a currency backed by promises of the world’s most powerful nation. Though the Iran war has dashed that US image.
Some interesting factoids:
December 16, 2006
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.
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.
Since the 1970s, the “petrodollar system” has been the invisible engine of American prosperity and power. However, the economic scaffolding that has buoyed its global hegemony is fraying, as geopolitical shifts and de-dollarization trends gradually erode the U.S. dollar’s absolute grip on global energy markets.
To make sense of how we reached this point, it is important to consider how the U.S. dollar achieved its global dominance and shaped our current economic reality.
In June 1974, the United States and Saudi Arabia signed a landmark economic and military cooperation agreement, establishing what has come to be known as the “petrodollar system.”
This consequential bargain was born in an era of political and economic uncertainty—inflation, Vietnam War and the 1973 Arab oil embargo. With the U.S. economy in a nosedive, then-President Richard Nixon, anxious to maintain the global demand for dollars, persuaded the Saudi government to finance America’s debt with its petroleum wealth. He convinced them to price their oil exclusively in U.S. dollars and to invest their surplus oil profits in U.S. Treasury bonds. In exchange, Washington agreed to provide the Saudis with weapons and protection. By 1975, all Organization of Petroleum Exporting Countries were pricing their oil in dollars.
In Iraq, for example, President Saddam Hussein’s fate was sealed when in 1999, he switched to trading Iraqi oil in euros; and officially converted his $10 billion reserve fund, held at the UN Oil-for-Food program, to euros in 2001. President George W. Bush’s invasion in March 2003 not only quashed Iraq’s euro threat, it sent a clear warning to other countries considering an alternative oil transaction currency.
Bernstein & Woodward followed the money to bring down Nixon.
Hm should we follow the money in relation to US foreign adventures?