Iran Blasts Dollar At OPEC Summit — Calls Dollar “Worthless”

In a stunning example of a stopped clock being right, Iran’s President Ahmadinejad assails the dollar, suggesting OPEC should break the petrodollar link:

“They get our oil and give us a worthless piece of paper,” Ahmadinejad told reporters after the close of the summit in the Saudi capital of Riyadh. He blamed President Bush’s policies for the decline of the dollar and its negative effect on other countries.

Oil is priced in U.S. dollars on the world market, and the currency’s depreciation has concerned oil producers because it has contributed to rising crude prices and eroded the value of their dollar reserves.

“All participating leaders showed an interest in changing their hard currency reserves to a credible hard currency,” Ahmadinejad said. “Some said producing countries should designate a single hard currency aside from the U.S. dollar . . . to form the basis of our oil trade.”

He was unsurprisingly echoed by statements from Mini-Mahmoud, Venezuelan dictator Hugo Chavez.

This expands an already wide rift within OPEC, as several states (most notably Saudi Arabia) are allies with the United States. They fear that dropping the dollar will also destroy any semblance of friendly relations between their governments and Washington. Many of their regimes could face internal resistance if American backing disappeared, and given some of their internal policies, it’s not likely that they’ll be peacefully overthrown.

Quite honestly, this has been on the horizon for a long time. Our own Federal Reserve and politicians, in an effort to keep the American economy moving (and themselves from political harm), have engaged upon a credit glut that has covered the world with American paper. And the world is slowly starting to realize that this paper is becoming worthless. To a large extent, they were still stuck with the dollar, as there wasn’t an alternative large and stable enough to be an alternative. With the growth of the Euro, though, the dollar no longer has a monopoly position in the world market.

A global dollar crisis is a nightmare for the entire world. But it’s becoming increasingly likely, and while Ahmadenijad might be crazy, he’s not stupid. He knows that his best option for getting rich on the back of the falling dollar is to get on the leading edge and ditch it before the crisis materializes. And if divesting of the dollar manages to cause that world panic after he’s complete, all the better to damage “the Great Satan” and turn him into a hero to the extremists at home.

To the vast majority of Americans, the “high price of oil” is OPEC’s fault. But in reality, how much of the high price is a reflection of the weakness of the dollar instead of a short supply? The vast majority of Americans see “crazy Mahmoud” spouting off, but I guarantee the prospect of oil being sold in euros rather than dollars is a prospect keeping many folks in Washington awake at night.

  • Brian T. Traylor

    Sadly, this will only serve as propaganda for the war machine.

    Ron Paul spoke of this eventuality in his speech before the House on Feb 6, 2006: The End of Dollar Hegemony

  • Don Lloyd

    “…The vast majority of Americans see “crazy Mahmoud” spouting off, but I guarantee the prospect of oil being sold in euros rather than dollars is a prospect keeping many folks in Washington awake at night.”

    The time to worry is if they insist in payment in pennies, worth less than their copper content, or in gold or in plutonium.

    There is no more efficient and lossless trade on earth than that of the computer bits of one currency for the computer bits of another.

    It is the willingness, or unwillingness, to hold a given currency on account that matters, and it only matters to the extent that a given decrease in the willingness to hold a given currency is largely equivalent to advancing in time the inflation of money supply which is forever ongoing without limit anyway.

    Regards, Don

  • Brad Warbiany


    I agree. It is the willingness to hold dollars that matters, not what currency they trade oil in. But I think if they switch to euros for oil, nobody will care to keep dollar reserves. All of a sudden the inflation that the US has hidden in the world’s monetary reserves becomes exposed, and the system crumbles under its own weight.

  • TanGeng


    One way you can look the petro-dollar connection is that the dollar is directly back by a promise to deliver some amount of oil. Some amount of oil can always be purchased by a dollar, but that amount does change according to the market.

    Once you remove the the petro-dollar connection, then the dollar no longer has that oil backing and loses a significant chunk of its value in the world market. It’s something lose sleep over.

    Central bankers in the US, Bernancke & co., and the Asian central bankers are probably losing sleep over it right now. These are the places where the dollar would be held in the highest esteem should the OPEC nations depart from the dollar.

  • TerryP

    The problem is once they dump the dollar, what will they go to the Euro, another fiat currency. They will likely not help themselves one bit as the Euro falls out of favor just as the dollar has since it has the same problems as the dollar: nothing backing it up except for a printing press.

    It may end up being a race as to which currency, the dollar, the Euro or possibly some other currency, transitions quickest to a non-fiat currency.

  • oilnwater

    monetary economists generally agree that the Age of Fiat Currency is over, however long it takes in real daily life.

    both the USD and Euro have very serious problems with this, because if a fiat is not implicitly backed by direct commodity, it is implicitly backed on promise of continued economic prosperity and payment by the population of the respective bloc/country.

    but to any thinking individual policymaker or economist, both the Euro zone and the United States are already suffering plateau-ing populations with age distribution headed for a very top heavy old population (not accounting for legal and illegal immigration.) the math is crystal clear, and i just think we are in very, very deep trouble.


    now, it is the time to invest in north america, since we dont need to rely on foreign countries for our own survival. having a weak dollar is great for our internal economy instead of having a strong one. north america is based on innovation.

  • dan

    ron paul ron paul ron paul is the answer

  • Hans

    The loss of wealth due to the collapse of the dollar will pale in comparison when, in 10 years, the US is crippled by the ElectroMagnetic Pulse emitted by a nuclear weapon detonated in the high atmosphere. Most all computers will be disabled, leading to disruption in, among other things, the food distribution system (and even food production). Vehicles will be stranded, lifeless, along the highways. Millions will die. It will, however, be our duty to populate.

  • LBest

    Francisco a weak green back is not good for the internal economy. You have to buy food and gas i.e higher prices i.e. inflation–Dont get confused in thinking it is all good because our exports go up. I wish it was that simple.

    And Hans–what are you talking about? populate what? a Woman? Please, radiation kills sperm too!

  • mike

    Ok Hans. You are a wee bit crazy. It might be time to see a professional. The world is not ending.

    I think that Ahmadinejad and Chavez are fantasizing a bit. Its quite obvious that the Saudis don’t support this. Therefore it wont happen.

    The world knows who these two men are. They stay awake at night coming up with ways to insult greatest nation on earth.

    They are not doing their struggling nations any good by poking jabs at the US. I pity the citizens they are supposed to be working hard to represent. They are squandering real opportunities that lay before them for headlines.

    Meanwhile we just laugh at them.

  • Peter Campellone

    So What!? Let the dictator talk. We have plenty, and I mean plenty of oil reserves all over the United States that we have yet tapped. If the world wants us to stop purchasing gas, well, we’ll do it. Good luck to the pampas oil princes with their supposed oil monopoly. If we stopped purchasing oil today. The middle east would suddenly implode just like the mortgage industry without cash flow. No one, nor country is above imploding.

  • Eric

    If we stopped purchasing oil from foreign countries, we would only be able to meet 35 to 40 percent of our energy needs. Imagine the impact that would have.

    In the meantime, the price of oil would drop dramatically until it reach a point stable between supply and demand. Then countries like India and China would buy more, slowly driving the price upwards.

    In the meantime, of course, the global economy would collapse into a massive depression as all the economies built around the petro-dollar tie collapsed.

  • Spiros – Banker

    How many of you thought about this equation or theory:

    Think in bigger picture is the message here. Starting from the source: Everyone blames subprime borrowers for this turn oil, now it’s about US currency and oil price around the globe…etc. Sure this is a serious argument but the validity of this argument is underlying at the source of money. Who control or have such access? Anyone ever asked that? Today’s environment where oil is traded between 92 – 99 per barrel; the real cause isn’t at subprime borrowers as many suggested. The chain reaction it is at the source of funds and foreign investors what we called hedge fund, from US insurance companies and foreign investment companies are the majority of players on wallstreet today. US Mortgage back end security is purchased by the hedge fund firms, as many of you know. In the mortgage lending world, imaging driving your vehicle at 100 miles and slam on your break to stop in 10 seconds. Who has this type of power? Well, I hope you see the point here so far. If not, go to and read about how it happened from the past few months.

    My thoughts are: How many hedge fund companies are back by foreign companies? Out of those foreign companies, how many of them are control by the “undesirable” countries that is not allies or enemy of US? US War on Iraq is not a popular one, as you all know. Could the threat of Bin Laden of bring US economic down to its knees is true? By attacking financial banking system to its halt and such disruption is work of terrorist? It’s looking more like a 9/11 on our economic as we are currently experiencing the transition of after effect. Some of you might say: oh, this is not that serious and US economic will be back next year. The global terrorist strategy that I am suggesting equates to slow down in US economic where inflation climate pushing dollar valuation lower. It has come true. Leaving this world economic rocking and unstable. Which one could cease an opportunity in the commodity market of oil, which controlled by Middle East mainly. The point here is, has US ever thought about controlling those investment dollars from foreign countries or imposes certain regulations in the monetary flow of foreign dollars into US economic? I would only assume there is no such policy existed based on what I have seen so far.

    What is next when you take the supply money chain away? Continue to lower rates from central reserve as the answer? No. Go after lender, mortgage loan officers? Go after Iran start another war? Pull out of Iraq now and cut the loss? Drilling US continent for more oil? Ask domestic and foreign car manufacture to speed up in hybrid vehicles and seriously invest in energy hybrid distribution facilities US wide? Or this is the strategy to close the gap of trade deficit around the world? Could Bush be that smart? Well, it al comes back to the source. MONEY.

    Damage has been done. But its time to set those foreign investment policies to control domestic US investment flow is essential.

    I would like to hear some good argument or comment of the above? Any?


  • jared

    What 5 things would you do today to protect yourself against a oil-dollar disconnect? US economic collapse and global depression?

  • Brad Warbiany


    Wasn’t it Napoleon who said “Never ascribe to malice that which can adequately be explained by incompetence”? I don’t see any reason at this point to suggest that it is anything other than the Federal Reserve printing money like it’s going out of style as an explanation for this mess, led by a bunch of politicians who think they can keep the printing press rolling and hope the ill effects don’t really hit until the next guy gets voted into office.

    Could your scenario be true? Perhaps, but I’d need to see a little more than conjecture before I really put any stock into that. If you come up with evidence to show that the scenario is plausible, let me know.

  • LBest


    What you have said is based in fact. Look at the amount of foreign aid oops I mean investment we need to keep our economy going–its to the tune of billions per day because we as a country spend more than we make. The problem is if we cut off or limit this investment without getting our own house in order our economy would deflate and it would cause huge problems for not only the government but joe six pack. I believe we should do this but it would take cutting back on all government spending along with the ave person turning into a saver instead of consumer before we just cut it off. What most people do not know is China, Russia and the Middle East hold enough dollars to nuke our econ system now just in dollar holdings and they have talked about doing this which of course effects our policies in government and not to the benefit of the US population. If you think about it real money and power is created by two thing and that is oil and trade surples neither of which we have. We must quit with oil dependence and the way to do that is alternatives to energy consuming products, but look were are heads get their or made their money–oil and large multinational corps which is causing the inbalances to begin with.

  • Jimbo

    I did’t read all of the responses to this article, so forgive me if I have repeated any of the above. Isn’t it obvious that this is just another ploy by a Middle East leader to weaken the American Economy? I think we have become far too quick to be critical of our own country and our own government. So much so, that we almost ignore the underlying issue. We use this moron’s statements to OPEC as another excuse to talk consiracy theories. I see this as an old-school Hitler-type using a media forum as a soapbox to spread anti-American sentiment indented to hurt our economy as our economy is our claim to world dominance. Same reason our World Trade Towers were taken down: to bring down the economy. A weak dollar is something that he wants to see, not something that already exists. Be careful how you look at this type of thing and keep your mind open. I agree with allot of what is said above, but I think it is skewed left and some is very short-sighted.

  • Jimbo

    What I meant to say above is a “worthless” dollar is something that he wants to see, not something that already exists.

  • Spiros – Banker

    Thank you all for your reply. Noted.