Executive View: The Saudis and the Dollar

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Say that Turkey had borrowed $100 million from a private American bank. The IMF would make an exchange: give Turkey $100 million in SDKS take Turkey's $100 million in greenbacks and use them to pay off the U.S. bank loan.Result there would be fewer dollars floating around the world, the greenback would strengthen, and the IMF would relieve the Federal Reserve of some of its risks The advantage for the Saudis is that the money they get for their oil−the dollar−would harden. OPEC countries might well want to exchange some of their hoard of dollars for SDKs. Reason: the value of this money would be guaranteed by the IMF. The oil-rich nations could use the new money for lending and investing, just like any other hard currency.

But if the system is to work, the U.S. must ultimately correct its huge trade deficits. That means it would have to take extreme steps to conserve and develop energy. Will it? Says Zombanakis: "America has everything, but it does not have the willingness to lower its standard of living to develop its resources.