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Comment by CamperBob2 | Hacker News Reader

So everybody involved in oil trading has to purchase $ to purchase oil!

I don't really understand why this is considered so important. Big deal, so oil is priced in dollars. Say I have some Euros and want to buy €100 worth of oil. I trade the €100 for $X, buy $X worth of oil 100 microseconds later, and now I have the €100 worth of oil I wanted. What difference did it make to me if $X was $0.01 or $10,000? I'm trying to buy oil, not currency.

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But you need currency to buy oil. And the result is an "artificial" stronger dollar and a weaker euro - a different exchange rate - compared with if you could purchase oil in euro

So the real problem is that currency has a value all its own, entirely apart from what goods and services it can buy. As a result, there's no way to blindly equate X in one currency with Y in another, because the very act of exchanging one for the other affects their relative values. Transactions that should be purely economic in nature have unavoidable political undertones.

I see.

Wow, that's broken.

But if you want oil and you have the machine that prints $ you don't have to actually pay for the oil - you are buying it with treasury debt.

And since the producer can only sell oil in $ they have no choice but to lend to you - so oil in $ and owning the $ machine gives you a certain advantage over having to actually export somethign to balance our payments

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