[adventured]

It's remarkable how commonly that link, between the USD and the vast US economy vs oil, is understood backwards. I think it's frequently misunderstood as an ideological result.

My other favorite: the failure to understand how a rising or falling dollar value is what has been triggering the commodity boom cycles, rather than primarily demand or magic animal spirits. The 1990s saw incredible global economic growth, and oil (gold etc) got cheaper and cheaper as the USD gained value toward the end of the decade. The global economy expanded dramatically from 1980 to 2000, yet the price of oil collapsed, despite demand going through the roof. It of course wasn't supply/demand that caused oil to go from $20 to $120 inflation adjusted, from ~1973 to 1980, it was a debased dollar; and it wasn't supply/demand that then caused oil to implode from $120 to under $20 (again, inflation adjusted) by 1999-2000. Similarly the GW Bush wars and economic policies + Fed policies heavily debased the USD, which sent oil, gold etc soaring and other nation GDPs soaring when priced in dollars. And then when a stronger dollar returned in 2014, post QE, oil plunged accordingly (and that was incorrectly blamed on oversupply of oil, when in fact oil had been in oversupply for years prior to it crashing). And again most recently, oil began climbing again, exactly when the dollar began falling from its highs (eg 100+ on the dollar index).

Modern 'economists' get these relationships entirely backwards. They also comically miss the way the US has been able to restrain Russia by using the USD to crash oil (their achilles heel), which was done in the Reagan years and toppled the USSR by bankrupting its finances (it wasn't military spending that did them in), and again immediately after the Ukraine invasion (brutally punishing their economy and making it difficult for Putin to continue to fund his foreign adventures).

[JumpCrisscross]

> it wasn't supply/demand that then caused oil to implode from $120 to under $20

Yes, it was. On the supply side, we got fracking. On the demand side, we got Great Recession.

> restrain Russia by using the USD to crash oil

The recent oil crashes were prompted, again, by supply-side factors. Not government intervention in the U.S. dollar's exchange rate. If anything, American military interventions in Libya and Syria, combined with equivocation with respect to Iran, has introduced supply-side constraints on the market.

[jacobush]

It's also remarkable how you can present only one side of the coin. Why aren't we all doing international trade in Rubles? Well, the military spending has at least something to do with that, the Soviet economy was not exactly a powerhouse compared to the US's.

And do you think the powers that be appreciated it when Saddam and Russia started to plan for an oil market denominated in EUR instead of USD?

That it exactly the sort of thing you might want to do as a sort of hedge against the restraint against Russia you mention. So while I agree with you 100% in the examples you describe, you should be aware that some talking about the "petrodollar" has this more nuanced understanding.