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Imagine this: you are knee deep in debt but every day you write cheques for millions of dollars you don't have — another luxury car, a holiday home at the beach, the world trip of a lifetime. Your cheques should be worthless but you keep buying stuff regardless because you've made sure that none of those cheques you write will ever reach the bank!
How? Well, you have an agreement with the producers of one thing that everyone needs and that everyone wants that they will accept your cheques -and only your cheques - as payment.
The product in question is oil, and your agreement with the oil producers means everyone must hoard your cheques so that they can buy it.
Since they have to keep a stock of your cheques, they can also use them to buy other stuff too. You write a cheque to buy a TV, the TV shop owner swaps your cheque for petrol/gas, that seller buys some vegetables at the fruit shop, the fruiterer passes it on to buy bread, the baker buys some flour with it, and on it goes, round and round — the cheque gets recycled but never actually makes it back to the bank.
You have a debt on your books for the cheques you wrote, but so long as they never reach the bank, you don't have to pay off your debts and in effect you have received your oil and TV for free.
This is the position the USA has enjoyed for over 30 years — it has been getting a free world-trade ride for all that time. It has been receiving a huge indirect subsidy from everyone else in the world - including the poorest of third world nations. As its debt grows it has merely to print more money (write more cheques) to keep trading. No wonder it is an economic powerhouse!
Then one day, one petrol seller (let's name him Saddam - for arguments sake) says he is going to accept another person's cheques, and a couple of others think that might be a good idea too. If this spreads, people are going to stop hoarding your cheques and they will come flying home to the bank asking you to make good on them. But since you don't have enough gold in the bank to cover all the bad cheques you've written however, very nasty stuff is going to hit the fan!
BUT, you are big, tough and very aggressive. You don't easily scare the other guy who can write cheques, he's pretty big too, so you contrive a 'legitimate' excuse to beat the living hell out of the lone oil producer to make him revert back to selling his oil in dollars again without anyone knowing what your real motives were.