The Dollar May No Longer Be King

Constantly rising oil prices may cause an energy crisis that will eventually lead to a new world financial system based on multiple currencies instead of the U.S. dollar, according to a Rice University study. The dollar can no longer buy what it used to, most economists believe that in the very near future most countries if not all will start to diversify the currencies that they buy oil with, Iran and Kuwait have already started the process of excepting Euros and Yens, all in all this would be a huge step forward in fair trade and ending the U.S petrodollar monopoly.

Rising inflation fed largely by oil-producing countries will force Western governments to tighten monetary policies, undermining export-driven economies in China and India, according to a study released by the Houston-based University’s Institute for Public Policy. That would undercut energy demand, ending cheap credit worldwide that is fueled by so-called petrodollars and further undermining the global economy. "We think that energy markets may play an important role in bringing about a financial crisis that may transform the global financial system," the study's authors wrote. The U.S. dollar's status "would likely come to an end."

German business confidence rose in May despite record oil prices and the U.S. slowdown affecting some parts of Europe's economy. German Ifo Business Climate Index came in at 103.5 from an expected 102.1, 8:00 am GMT. EUR/USD currently trading at $1.5728 as of 8:30 am, GMT and expected to rise. Moving on to Britain, billionaire investment guru George Soros said that Britain has yet to suffer the worst fallout from the credit crunch. The acute phase of the global crisis may have passed but the real economy is only just starting to feel the impact. Mr. Soros added the world was set for a period of greater instability with British house prices likely to fall, and no one knows how bad it’s going to get. Delivering his gloomy assessment on BBC Radio, he insisted: “The degree of uncertainty is also uncertain”. GBP/USD currently trading at $1.9666 as of 8:30 am, GMT.

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