Money is Power?????

My phone rang one night and it was one of my favorite catarack having neighbors. This had to be about six months ago during the height of the crazy oil days. He invited me over for snacks and conversation and I couldn't resist because our conversations are always so enlightening! I arrived at his house and sat down when he said:


Weedy: (puff, puff)...so what i'm saying is, what is money?


Me: Money is what you use to buy stuff.


Weedy: (puff, puff)...right. Money is a medium of exchange.


Me: Yeah that's what I mean.


Weedy: (puff, puff)..if money is a medium of exchange, what does American money represent?


Me: Well it use to be based on gold a long time ago but now it is based off of.....nothing I guess.


Weedy: Yeah once FDR took America off the gold standard... (puff, puff)...the only thing the dollar represented was a promise and the word of our government. So if we lose the trust of the world, what happens to the value of the dollar?


Me: I guess it goes down.


Weedy: That's right now let's take a look at what's going on in the world today. The way you compare the value of one currency to another is by how much of mutal commodity each currency can purchase.


Me: That makes sense..


Weedy: (puff, puff)...now as we know the mutual commodity use to be gold but guess what the new gold is?


Me: What?


Weedy: (puff puff)...come on now, take a guess!


Me: I don't know!


Weedy: Oil!!!!


Me: HUH?


Weedy: That's right Oil is the new gold! Look at what's happening...(puff, puff)...in the Middle East. Oil has become so valuable in the world that OPEC can decide the value of different currencies based on how much they want to sell their oil to different countries. If OPEC decides that for one barrel of oil they want 65 US dollars and 45EU than the value of the EU is higher than that of the dollar.



Me: That makes sense but I thought the conversion rate controlled that?


Weedy: Yeah but the conversion rate is based of a medium of exchange and the value that seller places on the currency. Since the dollar is based solely on the 'word' of the US and not gold, if the seller doesn't value the 'word' of our government as much as they do another, than they can decide it will take more of your currency to equal the value of a more favorable country.


Me: So what's to stop them from just ruining a country's economy completely? It seems like they should rule the world.


Weedy: (puff, puff)...that is why we have brave young men and women in uniform!


Me: WHAT????


Weedy: When your word means little, your muscles better be big and strong. Since these oil countries stopped valuing the word of our government, they pretty much said you will take our dollars at this value or we will blow you up, over through your government and install a leader who will value our dollar at this value.


Me: Now I am no believer that Iraq was about WMD's, but I never thought about it this way.


Weedy: (puff, puff)...yeah I remember when the US put Sadam in power years ago for the same reason....(puff, puff)...soon as Sadam got comfortable and started talking shit to the US and was ready to stop his support for upholding the value of the dollar, all of the sudden we get attacked and Iraq has WMD's.


Me: Deep........



What do you think?