The Endangered US Dollar

Unfortunately, Super Squirrel is sad to say that his rodent powers are limited, and he would be unable to effect the US economy by holding all his squirreled-away assets in Euros or some other non-American Dollar currency. However, if you, dear reader have a few trillion stashed away, your choice of currency in which you hold it could effect the US economy big-time.

This linked article by Richard Heinberg succinctly explains how precariously balanced the US economy (and most western democracies) is on the fact that the US dollar is the world's default currency, and how it really isn't backed up by anything intrinsically tangible. He uses a very simple metaphor to show why the dollar is America's Achilles heel:

Imagine being able to write checks and then convince the people you give them to not to cash them. Perhaps they find the checks themselves comforting to hold onto; or maybe you have a friend who agrees to sell groceries or gasoline for your checks only, and then happily stockpiles and re-circulates them. In either case, you may be tempted to write checks for much more than you have in your bank account. As long as the checks themselves are regarded as valuable and not cashed, you get a free ride. But if people stop finding your checks comforting to hold onto, or if your friend starts selling groceries for other people's checks or for gold or silver, then the game is up. It will be revealed that your account is overdrawn and you will be in trouble.

As a real world example, if OPEC countries decide (as Iraq did before they were invaded ...hmmmm) to ask for payment in, say, Euros for their oil, rather than US dollars, then more and more countries would start dumping their dollar holdings in order to pay for their imports in the new default currency. The run on the dollar that would ensue would effectively make the US dollar worthless AND their trillion dollar debt unpayable. The US would not be able to keep writing their bad checks, as no one would want them anymore, and the entire illusion of the US' economic might would evaporate.

The more you examine US interests in the Middle East, the more you see how it is tied into the control of oil reserves, for oil is intrisically the only thing backing up the greenback. At least until OPEC changes its terms of payment...