"Does it then make zero sense for oil producing nations to trade in the Dollar anymore? What effect would a switch have on the domestic economy?"
I think we've already seen what will happen when oil-producing nations threaten to sell oil in Euros. Iraq began selling its oil in Euros in the fall of 2000; by the spring of 2002 the the Bush regime had Condelezza Rice floating balloons to test American readiness for invading Iraq. Recall? All of a sudden the administration was concerned over an airman downed at the start of the first Gulf War, claiming that he might still be alive and secretly imprisoned in Saddam's Iraq. What was that if not an attempt to spark and measure outrage? What followed was the long walk down the Orwellian yellow brick road to war.
USG foreign policy is in major part about punishing those that show signs of opting out of neo-liberal arrangements that benefit the owning class (this the legacy of Nitze, Kennan, et alia). We don't invade Panama, escort a leader out of Haiti at gunpoint, mine the harbors of Nicaragua, or march into Baghdad because anyone in the know perceives them, in themselves, to be a geniune threat. It's all about
crushing the example of alternate models. The capitalist says Greed is Good in one breath and whispers apathy is better in the next -- all the more easy to exploit those when they have no hope for a better future! We've spent the last 50 years crushing hope and extorting behavior conducive to preserving elite advantage.
The US has about 50% of the world’s wealth but only 6.3% of its population. In this situation we cannot fail to be the object of envy and resentment. Our real task in the coming period is to devise a pattern of relationships which will permit us to maintain this position of disparity without positive detriment to our national security. To do so, we will have to dispense with all sentimentality and day-dreaming, and our attention will have to be concentrated everywhere on our immediate national objectives.
We need not deceive ourselves that we can afford the luxury of altruism and world benefaction. We should cease talks about such vague and unreal objectives as human rights and raising of living standards and democratization. The day is not far off when we are going to have to deal in straight power concepts. The less we are then hampered by idealistic slogans, the better.
--- George Kennan, PPS 23, 1948
While Kennan's remarks have governed US foreign policy since WW2, I think now we are the overstretched hegemon grasping through use of our last asset to retain control. That last asset is military force. We intend to use our oil-driven armies to preserve oil-security and reserve currency status for the dollar.
The governing beliefs: (i) Whoever controls the future flow of the majority of the world's oil controls the future world; (ii) whoever retains status as the world's reserve currency gets to run otherwise currency-wrecking deficits and borrow prosperity indefinately -- and preserving petro-dollar status ensures reserve status; and (iii) expanding neo-imperial garrisons throughout the Mideast and Caspian Basin secures control and status. Thus believe the neo-conservative agents of the ruling class. Thus Monicagate and impeachment; December 12 2000; 9-11 LIHOP; "carpets of gold or carpet bombing" in Afghanistan; Carnahan in 2000, Wellstone in 2002, the first Democratic governor in "black box" Georgia in over 130 years despite a 10 point election-eve deficit; thus "yellow cake" and the "threat" of balsa-wood radio-controlled planes spraying Anthrax over Kansas; thus 1,300+ dead soldiers in Iraq; thus exit-poll nullifying theft of the election in 2004; thus "freedom is on the march" toward target Iran. It's Brzenzski's Great Game in motion. It is the full blossoming of late capitalism into a foul smelling aristolochia gigantea of violent neo-imperialism. Not fun stuff for anyone.
The problem with this little neo-con fantasy is the rest of the world isn't sitting back as mere spectators while the USG bolsters its position of advantage. No, they plan their reaction to our actions. Not by frontal counter-assault, but as termites eating away at the foundations. Central bankers vote by restructuring reserves and have been voting against the long term prospects of the U.S., thus the dollar approaches 1.4 per Euro. But what will emerge, now that the capitalist nations of the world are in open conflict, is war -- whether hot or cold, it will be and is war.
People rarely win wars, governments rarely lose them. People get killed. Governments molt and regroup, hydra-headed. They first use flags to shrink-wrap peoples' minds and suffocate real thought, and then as ceremonial shrouds to cloak the mangled corpses of the willing dead.
---Arundhati Roy
Every gun that is made, every warship launched, every rocket fired, signifies in the final sense a theft from those who hunger and are not fed, those who are cold and are not clothed.
---President Dwight D. Eisenhower
Hatred ever kills, love never dies such is the vast difference between the two. What is obtained by love is retained for all time. What is obtained by hatred proves a burden in reality for it increases hatred.
---Ghandi
You're not to be so blind with patriotism that you can't face reality. Wrong is wrong, no matter who does it or says it.
---Malcolm X
If you assume that there's no hope, you guarantee that there will be no hope. If you assume that there is an instinct for freedom, there are opportunities to change things, there's a chance you may contribute to making a better world. That's your choice.
---Noam Chomsky
You must be the change you want to see in the world.
---Ghandi
Now. Or never.
---Henry David Thoreau
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