NationStates Jolt Archive

There are many reasons for the Iraq War, Isreali pressure, oil, but what about Saddam's business. Saddam stopped donig transactions in US dollars and went to Euros, could the war have been a desperate atempt, as well, to control the slide of the dollar?

There are many reasons for the Iraq War, Isreali pressure, oil, but what about Saddam's business. Saddam stopped donig transactions in US dollars and went to Euros, could the war have been a desperate atempt, as well, to control the slide of the dollar?

Nah, America's bad habit of using it's international credit card and not making repayments is the main reason for the slide.

Nah, America's bad habit of using it's international credit card and not making repayments is the main reason for the slide.
I have read that there was a fear that if Saddam starting using Euros, and this caught on in the middle east, oil would have then become pegged to the Euro instead of the Greenback. The flood of money out of the US to be converted into Euros would have totally screwed the US economy.
So there may be a possibility that there were other underlying reasons to go to war, other than 'He tried to kill my Daddy'.

I have read that there was a fear that if Saddam starting using Euros, and this caught on in the middle east, oil would have then become pegged to the Euro instead of the Greenback. The flood of money out of the US to be converted into Euros would have totally screwed the US economy.
So there may be a possibility that there were other underlying reasons to go to war, other than 'He tried to kill my Daddy'.

The Iraq war (II) is complex and might have many reasons since international politics is not for faint-hearted. I doubt other Arab nations would copy Iraq's economic policies as it's situation was unique (and self-perpetuated). But then who knows what Saddam Insane thinks about?

I don't think they want to "save" the dollar. They think if it is devalued enough, it will make America's exports more competetive and will make other country's products more expensive. Theoretically it should make the trade deficit smaller but theories don't always work out.

While I am not big on some of his views, Paul Krugman pretty much hit it right on the head with his views on International "competition" and the value (or lack thereof) of measuring a trade deficit in his book POP CULTURALISM.

To paraphrase Krugman: International competition doesnt really exist, it is not a zero-sum game; meaning-- If China's economy improves, or if Japan's economy grows, great, that means they are doing something right, whether it is increasing demand for their products, or made advancements in technology. None of these things harm the United States directly, and since we dont have centralized trade, but tens of thousands of independent companies that buy and sell as they please, not working together for "team usa" we are not competing with anyone, since the "WE" doesn't really exist. Not to mention, some companies are multi-national corporations (MNC) so whose "side' of the competition would you even attribute those utility points.

also, the trade deficit is a meaningless number, and if there is insistance on measuring the number, it is strongly misinterpretted. Tell me, what would it mean if we had a $1 trillion trade deficit with China this year?? Simply that we purchased $1 trillion more goods from China than they bought from us. Does this mean we are falling apart at the seams and that this needs to be corrected??? No, not at all. Just the opposite. That means our citizens and companies have enough money, have made enough profits, where we are able to buy whatever goods we want, some of the happen to be imports. It means not only are we a wealthy people with a high standard of living, but we have taken capitalism to its true meaning, and have an open trading system where Americans can buy items from whereever we want, with the exception of Cuba.

this work of Mr. Krugman was an excellent piece, and was actually assigned to me back as an undergrad for an international economic analysis class.

While I am not big on some of his views, Paul Krugman pretty much hit it right on the head with his views on International "competition" and the value (or lack thereof) of measuring a trade deficit in his book POP CULTURALISM.

To paraphrase Krugman: International competition doesnt really exist, it is not a zero-sum game; meaning-- If China's economy improves, or if Japan's economy grows, great, that means they are doing something right, whether it is increasing demand for their products, or made advancements in technology. None of these things harm the United States directly, and since we dont have centralized trade, but tens of thousands of independent companies that buy and sell as they please, not working together for "team usa" we are not competing with anyone, since the "WE" doesn't really exist. Not to mention, some companies are multi-national corporations (MNC) so whose "side' of the competition would you even attribute those utility points.

also, the trade deficit is a meaningless number, and if there is insistance on measuring the number, it is strongly misinterpretted. Tell me, what would it mean if we had a $1 trillion trade deficit with China this year?? Simply that we purchased $1 trillion more goods from China than they bought from us. Does this mean we are falling apart at the seams and that this needs to be corrected??? No, not at all. Just the opposite. That means our citizens and companies have enough money, have made enough profits, where we are able to buy whatever goods we want, some of the happen to be imports. It means not only are we a wealthy people with a high standard of living, but we have taken capitalism to its true meaning, and have an open trading system where Americans can buy items from whereever we want, with the exception of Cuba.

this work of Mr. Krugman was an excellent piece, and was actually assigned to me back as an undergrad for an international economic analysis class.

I'm a big fan of Krugman and would love to see that article. The problem is I think you can't simply just continue to spend money like there is no tommarow and not be earning money at the same time or else your currency isn't backed up by anything and devalues rapidly like the dollar is now.

For example lets say I start my own country on some pacific island some where. I declare that my currency the Soviet narco dollar is worth 1 us dollar and I buy a bunch of stuff with it but don't start up any local businesses. The Soviet Narco dollar would rapidly become worthless and I would have to buy things with wheelbarrows full of it.

If things get too out of hand in this country, our currency starts to look like it is in free fall and the deficit gets too big, other countries may start to get nervous and stop wanting to fund our debts. If that happens we would have to raise interest rates to make it more attractive to invest in the US, but which would hurt our economy. Plus our standard of living would drop because our currency would be worthless internationally.

Anyway thats what I think, I took Macro and Micro economics but I decided to major in Poly Sci.

Just to comment it was not just Iraq that wanted to switch from dollar but also Venezuela that produces alot of oil. And they had a almost succefull military take over that was probably to some extent supported by the USA (but alot of people started protesting and Chavez was reinstated).

I'm not an expert on econimc but I guess that the USA would be pretty screwed financially with their large tradedeficit (that I don't know the history behind) and their budgetdeficit (that they have had most of time sens the WW2), if the dollar wasn't the number one internatiolly currency sens Bretton Woods.