by Tyler Durden
A recently declassified, formerly Confidential, 30 year old memo prepared by Henry Owen for President Jimmy Carter's eyes only, highlights the perils facing the United States if oil were to be priced in SDRs instead of dollars, a topic which is all the rage today as rumors are swirling that this is an imminent transition to be "put" upon the United States.
In response to your request, we have considered, and discussed with other agencies, whether the US should favor use of SDRs instead of dollars, to pay for cure oil... I have concluded that dollar pricing should be maintained -- a view that is shared by State, Treasury and CEA.
1. An announcement that dollars were no longer being used as the unit of account in paying for oil would trigger selling of dollars on the foreign exchange markets. So we would suffer.
2. I don't see any offsetting gain, since OPEC would probably raise prices in SDR terms, as necessary to recover revenue losses if the SDR appreciated relative to the dollar.
And the conclusion:
We might be able to persuade the OPEC countries to make the shift if the dollar weakened but that's precisely when the move would be most damaging to us.