Ghana plans to buy oil with gold instead of dollars • Hacker News Board

Re: Ghana plans to buy oil with gold instead of dollars

#61

Post by [deleted] » Fri, Nov 25, 2022, 2:50 PM UTC

tcbawo wrote: post #53

ben_w wrote: post #20

Earlier quoted context omitted.

I'm only at the level of guessing for topics like this, but my guess is that a chain reaction is more likely to see a switch from USD to Renminbi than a switch to gold (or Euros). China because of the potential assuming similar GDP/capita as the current USA. Not soon because I expect as a prerequisite for change being the new winner's GDP to be dominant rather than just joint top 3 in a ranking system that changes th…

Do you think GDP is the critical factor for determining a global reserve currency? IMO, respect for property ownership rights, legal/judicial recourse, ubiquity of US banks, and political stability are large contributing factors that few other countries can compete with. China has a pretty checkered past regarding ownership rights for citizens who are critical of its leadership.

[deleted]

Re: Ghana plans to buy oil with gold instead of dollars

#62

Post by tremarley » Fri, Nov 25, 2022, 2:51 PM UTC

pwm wrote: post #12

I know a lot of people dislike bitcoin here but I'm wondering (with the huge assumption that its value stabilises over time) would it not actually be a better solution? Not just from an obvious logistical but also from an environmental perspective? I'd imagine gold mining to be much more destructive (both to nature and to human life).

It would be a lot easier. Many countries currently keep bitcoin in their reserves such as Russia, USA & China.

Eventually Bitcoin or a similar style coin will be used for global trade

Re: Ghana plans to buy oil with gold instead of dollars

#63

Post by norswap » Fri, Nov 25, 2022, 2:52 PM UTC

kaladin_1 wrote: post #3

Interesting the pressure is increasing. More and more countries questioning why they need to base their foreign transaction on the US Dollar. Could this mounting unrest be as a result of the seeming inability of the US Federal bank in checking inflation of the US Dollar. Also, some of these Nations can no longer determine what benefit it is to them is using the US Dollar as their reserve currency and trading currency…

> Could this mounting unrest be as a result of the seeming inability of the US Federal bank in checking inflation of the US Dollar.

This is completely backwards. The problem right now is that the dollar is too strong, meaning expensive wrt other currencies. In this context, inflation of the USD supply, leading to devaluation of the USD would actually help other countries that are suffering from the strong dollar.

I'm not saying it would be good for the US, but it certainly would be good for pretty much everybody else.

Re: Ghana plans to buy oil with gold instead of dollars

#64

Post by matthewdgreen » Fri, Nov 25, 2022, 2:53 PM UTC

ben_w wrote: post #20

kaladin_1 wrote: post #3

Interesting the pressure is increasing. More and more countries questioning why they need to base their foreign transaction on the US Dollar. Could this mounting unrest be as a result of the seeming inability of the US Federal bank in checking inflation of the US Dollar. Also, some of these Nations can no longer determine what benefit it is to them is using the US Dollar as their reserve currency and trading currency…

I'm only at the level of guessing for topics like this, but my guess is that a chain reaction is more likely to see a switch from USD to Renminbi than a switch to gold (or Euros). China because of the potential assuming similar GDP/capita as the current USA. Not soon because I expect as a prerequisite for change being the new winner's GDP to be dominant rather than just joint top 3 in a ranking system that changes th…

Wouldn’t a switch to Renminbi as a global reserve currency be fundamentally incompatible with China’s currency control regime? This has always been the explanation I’ve been given for why such a switchover is improbable.

Re: Ghana plans to buy oil with gold instead of dollars

#65

Post by 988747 » Fri, Nov 25, 2022, 2:53 PM UTC

Isinlor wrote: post #39

ur-whale wrote: post #18

Earlier quoted context omitted.

Apologies, but your reading of the situation is shallow. What do you think led Vlad to invade? The US has been mounting a proxy war against Russia in Ukraine for the past 20 years, one they're ready - barring political upheaval in the US - to fight down to the last European.

Polish and Ukrainian economies were exactly the same size in 1991 after collapse of the Soviet Union. In 2021 Polish economy was 3 times bigger than Ukrainian and almost 2 millions of Ukrainians emigrated to Poland for work. Very clearly Poland done some things right, while Ukraine did not. The one important thing that we have done right appears to be immediate turning towards West after collapsing communist regime i…

> Ukraine means "borderland". Historically Ukraine was in a constant state of wars between Polish-Lithuanian Commonwealth, Swedish Empire and Russian Empire since before USA even existed.

Don't forget Turkey. Ukraine was also invaded by Turks and Tatars many times.

Re: Ghana plans to buy oil with gold instead of dollars

#66

Post by 988747 » Fri, Nov 25, 2022, 2:56 PM UTC

tcbawo wrote: post #53

ben_w wrote: post #20

Earlier quoted context omitted.

I'm only at the level of guessing for topics like this, but my guess is that a chain reaction is more likely to see a switch from USD to Renminbi than a switch to gold (or Euros). China because of the potential assuming similar GDP/capita as the current USA. Not soon because I expect as a prerequisite for change being the new winner's GDP to be dominant rather than just joint top 3 in a ranking system that changes th…

Do you think GDP is the critical factor for determining a global reserve currency? IMO, respect for property ownership rights, legal/judicial recourse, ubiquity of US banks, and political stability are large contributing factors that few other countries can compete with. China has a pretty checkered past regarding ownership rights for citizens who are critical of its leadership.

Property rights and such are secondary. The primary issue is: who has the power? Right now the answer to that question is "US", but since China is catching up on GDP, and, unlike US, actually manufactures things. If China decides that they want payments for all the goods that they export to be in RMB then there's nothing the rest of the world can do about it, except stop all the imports from China (which would take decades, because they have to learn to manufacture all those goods themselves). Once most of your imports come from China instead of the US it does make sense to use Chinese currency as the reserve currency, since you are going to need a lot of RMB to pay for your imports anyway.

Re: Ghana plans to buy oil with gold instead of dollars

#67

Post by simple-thoughts » Fri, Nov 25, 2022, 2:57 PM UTC

For people saying that this is a sign of the dollar dominance ending consider this.

Gold is valued in dollars. Oil is valued in dollars. Any gold for oil exchange will be decided by the going dollar rate of each. Counter parties and middlemen assisting this trade will be hedging their positions with dollar settled derivatives traded on deep and liquid dollar markets.

Re: Ghana plans to buy oil with gold instead of dollars

#68

Post by matthewdgreen » Fri, Nov 25, 2022, 3:00 PM UTC

988747 wrote: post #66

tcbawo wrote: post #53

Earlier quoted context omitted.

Do you think GDP is the critical factor for determining a global reserve currency? IMO, respect for property ownership rights, legal/judicial recourse, ubiquity of US banks, and political stability are large contributing factors that few other countries can compete with. China has a pretty checkered past regarding ownership rights for citizens who are critical of its leadership.

Property rights and such are secondary. The primary issue is: who has the power? Right now the answer to that question is "US", but since China is catching up on GDP, and, unlike US, actually manufactures things. If China decides that they want payments for all the goods that they export to be in RMB then there's nothing the rest of the world can do about it, except stop all the imports from China (which would take d…

Saudi Arabia (to pick a major oil exporter) imports about 20% of its goods from China. But it also imports vastly more from regional partners and the US and Europe, not to mention that it depends on the US to secure all of its oil exports to China across thousands of miles of vulnerable ocean routes.

Re: Ghana plans to buy oil with gold instead of dollars

#69

Post by ethbr0 » Fri, Nov 25, 2022, 3:02 PM UTC

988747 wrote: post #66

tcbawo wrote: post #53

Earlier quoted context omitted.

Do you think GDP is the critical factor for determining a global reserve currency? IMO, respect for property ownership rights, legal/judicial recourse, ubiquity of US banks, and political stability are large contributing factors that few other countries can compete with. China has a pretty checkered past regarding ownership rights for citizens who are critical of its leadership.

Property rights and such are secondary. The primary issue is: who has the power? Right now the answer to that question is "US", but since China is catching up on GDP, and, unlike US, actually manufactures things. If China decides that they want payments for all the goods that they export to be in RMB then there's nothing the rest of the world can do about it, except stop all the imports from China (which would take d…

China can't tank imports until they finish pivoting to their own internal, consumptive middle class. And probably not even then.

The plan the international community hoped for is actually somewhat working, the timeline for China's giant population to metabolize it was just wrong.

Large Chinese middle class = power = political risk to disrupting the economy = incentive not to rock the international trade boat's status quo.

The CCP is already seeing with the anger over zero-COVID that {middle class life} >> {good of the Party} for most of the population.

Unfortunately, China probably also learned from the USSR that the entire charade only collapses when you blink and refrain from using the military to crush civilian dissent. Which doesn't bode well for Chinese citizens...

Re: Ghana plans to buy oil with gold instead of dollars

#70

Post by hmate9 » Fri, Nov 25, 2022, 3:04 PM UTC

simple-thoughts wrote: post #67

For people saying that this is a sign of the dollar dominance ending consider this. Gold is valued in dollars. Oil is valued in dollars. Any gold for oil exchange will be decided by the going dollar rate of each. Counter parties and middlemen assisting this trade will be hedging their positions with dollar settled derivatives traded on deep and liquid dollar markets.

Gold isn’t valued in dollars. You can sell gold for any currency.

Oil is primarily transacted with dollars because it’s the worlds reserve currency. But if that were to change to whatever, you can still sell your oil and gold for whatever the new dominant currency is. Meanwhile your dollar is (presumably in this case) worth way less in terms of buying power than when you first bought it.