What would happen to the economy if america pulled out of Iraq and ended its embargo's?

Question

FOR years america has enforced oil embargo's on Irq Iran AND others in the middle east to control the price of oil .
THIS has been done in large part to prop up a failing american dollar and is the reason that today we are far worse off then we where 40 years ago .
THIS does not mean to say that we have not advanced our industries and have stopped growing as a nation but we have created a nation of people divided along economic lines with many people falling to be able to support families .
Today the average home now has two incomes and this is because of inflation caused by a failing american dollar and if oil prices began to drop people would see a real decline in the purchasing power of the american dollar on the world market and this is the main reason we must continue to control the world supply of oil .
Without srict control oil prices would fall and this would create a disaster for american dollars world wide .
Inflation would begin to skyrocket and a new depression would begin

Answer 1

A hundred years ago it was called “dollar diplomacy.” After World War II, and especially after the fall of the Soviet Union in 1989, that policy evolved into “dollar hegemony.” But after all these many years of great success, the dollar dominance is coming to an end.

It has been said, rightly, that he who holds the gold makes the rules. In earlier times it was readily accepted that fair and honest trade required an exchange for something of real value.

This "goden rule" is now an oily one.

During the 1970s the dollar nearly collapsed, as oil prices surged and gold skyrocketed to $800 an ounce. By 1979 interest rates of 21% were required to rescue the system. The pressure on the dollar in the 1970s, in spite of the benefits accrued to it, reflected reckless budget deficits and monetary inflation during the 1960s. The markets were not fooled by LBJ’s claim that we could afford both “guns and butter.”

Once again the dollar was rescued, and this ushered in the age of true dollar hegemony lasting from the early 1980s to the present. With tremendous cooperation coming from the central banks and international commercial banks, the dollar was accepted as if it were gold.

Most importantly, the dollar/oil relationship has to be maintained to keep the dollar as a preeminent currency. Any attack on this relationship will be forcefully challenged—as it already has been.

In November 2000 Saddam Hussein demanded Euros for his oil. His arrogance was a threat to the dollar; his lack of any military might was never a threat. At the first cabinet meeting with the new administration in 2001, as reported by Treasury Secretary Paul O’Neill, the major topic was how we would get rid of Saddam Hussein-- though there was no evidence whatsoever he posed a threat to us. This deep concern for Saddam Hussein surprised and shocked O’Neill.

It now is common knowledge that the immediate reaction of the administration after 9/11 revolved around how they could connect Saddam Hussein to the attacks, to justify an invasion and overthrow of his government. Even with no evidence of any connection to 9/11, or evidence of weapons of mass destruction, public and congressional support was generated through distortions and flat out misrepresentation of the facts to justify overthrowing Saddam Hussein.

There was no public talk of removing Saddam Hussein because of his attack on the integrity of the dollar as a reserve currency by selling oil in Euros. Many believe this was the real reason for our obsession with Iraq. I doubt it was the only reason, but it may well have played a significant role in our motivation to wage war. Within a very short period after the military victory, all Iraqi oil sales were carried out in dollars. The Euro was abandoned.

Answer 2

This is untrue. Inflation has many causes, and has been under strict control by the Federal Government to control its growth. It's affected by several factors, including global economic demand for U.S. goods, the strength of the currency against other global currencies, and, yes oil. But Oil is not the single factor affecting the currency.

As to the U.S. controlling oil - this is fundamentally untrue. A large portion of oil production occurs in Venezuela and Russia, countries that the U.S. has little direct intervention over. Saudi Arabia is a major oil provider, and has not felt a U.S. embargo over goods. In addition to this, OPEC's oil control far exceeds U.S. intervention. Remember that in 1976 and 1980 OPEC was able to vastly increase the cost of crude oil on international markets without U.S. intervention.

You seem to be confused about oil prices - if oil prices dropped, the cost of goods would decrease, and you would eliminate inflation. You would probably have stagflation, where the U.S. dollar stays relatively stable in terms of value. If oil prices increased, on the other hand, prices would increase and people would be paying more money all over the board, and require more money for their standard of living - that is inflation.

Answer 3

Inflation is real. 20% of the morgages taken in the last three years are ARMs. With interest rates rising these new home owners will not be able to pay their morgages. Middle class will be in deep do do.

Answer 4

This would all be very interesting... if it were even remotely based on reality.