It's an interesting threat, and one that we're going to have to keep out eye on. But I have reservations about how effective multinational cooperation on international monetary policy can be. One of the reasons that the dollar is the global reserve currency is because there is so much of it in circulation. No other currency is as liquid. Moving oil purchases of a bloc of countries to a non-dollar basket of currencies…
Great insights, but I think we have to do more than keep our eye on it. I think it's imperative that we transition significantly to non-oil based energy consumption (as the Obama administration is encouraging). The problem is we've allowed ourselves to become too dependent on spending, accounting for 70% of our economy. Americans have become accustomed to cheap products, and gas, while at the same time turning a nose…
The threat of oil-producing countries shifting their exchanges from dollar denomination to a non-dollar basket of currencies is that all of a sudden the demand for this vast amount of dollars in circulation outside of the United States will drop, and there's very little that the U.S. could do about that immediately. If the demand for dollars drops, its value relative to other currencies drops, and the United States will face massive inflation in imported manufactures, commodities, and raw materials.
Producing green technology at home may wean our dependence on oil, but doesn't do much to prevent our currency from collapsing due to a sudden drop in demand for it abroad.