Eurodollars And The Petrodollars

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Eurodollars And The Petrodollars

These are a symptom rather than a disease. In the sixties and early seventies the United States bought much larger quantities of goods in Europe and elsewhere than it was selling; it also had many more tourists visiting Notre Dame, the Louvre, the Place Pigalle and other centres of culture and rest than there were Europeans visiting the Grand Canyon and Times Square. In consequence, dollars accumulated in Europe and these were augmented by Americans investing in European enterprises. That is all; the Eurodollars accumulated naturally from Americans buying more than they sold.

Similarly the accumulation of petrodollars. It is the result of the Saudi Arabians, the Libyans and the Emirates selling more oil in Europe than they can find hotels to buy or goods in Marks & Spencer. These big chunks of money, short-term deposits, then move like the armies of Genghis Khan over the known world, bidding up currency prices where they go, causing depreciation in the countries they leave behind. It's an embarrassment, but it's a result, not a cause.

So long as the OPEC countries couldn't spend the European currencies and the dollars they earned, the accumulation of petrodollars was inevitable. But the Iranians, some of the Arab countries and the other OPE C members have learned to spend their money far, far faster than people expected. As this has happened, their contribution to the accumulation has diminished or stopped. Does the big expenditure for oil have a depressing effect on the French economy and on employment - and also in the United States? Monsieur Barre, our premier, and President Carter have both said that it costs us heavily in jobs. If we bought, and the OPEC countries did not spend, it would. But as they have learned to spend - and some have truly mastered the art of extravagance - the money comes back for the purchase of machinery, equipment, Cadillacs and, unfortunately, a lot of guns and airplanes. But its net effect is depressing as well as distorting.


Learn More About European Monetary exchange

Oil Alternatives

Mr James Schlesinger, whom Mr Carter put in charge of the energy program, was a student of economics at Harvard.

Somewhere along the line we must have forgotten to tell him about the elasticity of demand it and that can be very low.

But aren't coal, solar energy, maybe nuclear energy, substitutes for oil? They are.

It's why we should plan intelligently and effectively but without paranoia.

The modem economy makes heavy use of materials.

But it has also, as you say, great capacity for substitution.

During the Second World War, we made real efforts to deny ferro-alloys... see: Oil Alternatives


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