Oil Prices and China

[BigTiny]

There's a lot of talk about China driving up oil prices lately, so I wondered; what happens when the oil market figures out China has been buying their product with worthless money? Since China is all State-owned, they just fabricate as much money as they need to buy at the time they make the purchase. That's how they can buy at any price, they just print it. There's no way the international exchange rate can keep pace with the Chinese willingness to print money. What happens to the world oil market when people finally figure this out, and China can no longer exchange their currency?

[F3d]

That's how they can buy at any price, they just print it. There's no way the international exchange rate can keep pace with the Chinese willingness to print money. What happens to the world oil market when people finally figure this out, and China can no longer exchange their currency?

Where are you getting this info from?

18.9% of GDP (2007 est.)

Here's their public debt for 2007. They're hardly printing money out like crazy. That's us. We don't use it wisely either and we borrow from China.

[Dave2pa]

I would say anything they buy on US markets are paid with US Dollars ,, any conversion would be done before that happens .if this was a Problem it would have already shown up.
Keep in mind we have been sending money over there from buying there Products and now we are paying the price

[Champlain Islander]

If they are paying with paper money based on their good faith it isn't any different than what we are doing. The high prices for crude are driven by commodity dealers/ traders who make money on volatility. There is no reason why we are close to 140 per barrel except that people are forced to pay it and there is a market. Crude should be changed from a commodity to a necessity. Lets face it"¦gas has risen 100% in the past year and the costs associated with the drilling, processing and retail markets don"™t even begin to allow for that type of mark up. It is being manipulated at the expense of everyone.

[BigTiny]

CI, back in the late 80's I thought the USSR was going to bring the problem of unbacked currency to light, but it never happened. Everyone just played along. I guess there was too much at stake to question anything. I was thinking since China is such a big part of the world economy now, that their currency failing like it did in the USSR would be disastrous. The old USSR wasn't participating in capitalist markets at nearly the same level as China. Their currency isn't even backed by faith in the government, but rather fear of it. I'm not sure which backing will evaporate first.