The Almighty Dollar.

There is a 1999 film about Air Traffic Controllers called "Pushing Tin." In one scene one of the characters comes home and his wife asks him what he wants for dinner. He responds by having a massive meltdown ranting about how he has to make thousands of split-second, life-or-death decisions every day and how when he got home it would be nice if someone could make even the simplest decision themselves.

That is pretty much where I am at the moment. So you'll excuse me if the rest of this seems distinctly half-a*sed.

Almost since the beginning to time the value of money has been determined by how much gold a nation holds in reserve to back its currency. Banknotes effectively functioned as IOU notes that could be exchanged for a similar amount of gold.

This really changed in 1933 when US President Franklin D Roosevelt did a deal with Abdualaziz Ibn al-Saud - the founder and first king of Saudi Arabia. In return for the US pretending that Saudi Arabia was a country al-Saud would only sell Saudi Arabia's oil in US Dollars (USD). This meant that anybody wishing to buy oil - so basically everybody - would have to build up reserves of USD's. As a results nation's currencies stopped being determined by how much gold they had in reserve but how many USD's they had in reserve.

This contradiction of the value of the USD being determined by the USD has fuelled hundreds of massively oversimplified "Fiat Money" conspiracies on the Internet which worryingly have started to become actual economic policy in places like Greece. However this arrangement protects the US from the becoming embroiled in a Greek-style debt crisis because if any nation were to force the US into default it would collapse the value of the USD wiping out the value of the reserves supporting the value of all other global currencies.

It also means that in any dispute between Saudi Arabia and the US the Saudis have the nuclear option of no longer trading oil in USD's leaving the currency completely unsupported. However as always with moves this dramatic it would not be without consequence for Saudi Arabia because a plunge in the value of the USD will automatically wipe out the vast reserves of USD's that the Saudis have built up from trading in oil.

Also there is no guarantee that a change in policy by Saudi Arabia alone would be enough to dislodge the USD as the global reserve currency. With the USD having been the global reserve currency for the past 80-odd years at this point pretty much all global trade is done in the currency. For example all the financial aspects of climate negotiations are currently calculated in USD's. Switching to another currency at this point would be completely exhausting.

Another thing that helps maintain the status quo is that there isn't really another currency ready to step into the USD's place. The closest is probably the Euro Dollar (Euro) but as the recent Eurozone crisis has demonstrated even that is far from a viable alternative. The US of course has recently been working hard to keep it that way by trying to damage the Eurozone economy further through its demands for sanctions on Russia and it's idiotic contributions to the Greek debt crisis.

While the US has been working hard to keep the Euro down it has also been working equally hard punching itself in the face with the sanctions of Iran. These sanctions have prevented China from buying Iranian oil instead making it dependent on Saudi oil. China's vast purchasing power has led to the Saudis partially reneging on their deal with Roosevelt and accepting payment from China in it's currency the Renminbi (Yuan).

Along with China's growing exports this has helped the Yuan grow to the point where it is beginning to be considered a possible global reserve currency. The International Monetary Fund (IMF) is currently in advanced negotiations with China to have the Yuan included in the basket of currencies that are used for the funds Special Drawing Rights (SDR). This would allow nations to make payments to the IMF in Yuan and more importantly allow the IMF to make huge payments to nations in Yuan rather than USD's.

The main problem the Yuan faces is that SDR currencies must be free-floating meaning that their value is determined by the price paid on the open market. The value of the Yuan is currently set by the Chinese government. On Tuesday (11/8/15) China announced that it would be changing the way that it sets the value of the Yuan to take into account market forces causing the value of the currency to plunge. This moves obviously brings the currency closer to the IMF standard but the fact that China is still setting the value of the Yuan means that it does not yet meet that standard. So although this move poses more questions then it answers it certainly served to highlight the issue.

Yesterday (12/8/14) there were two very large explosion in the port city of Tianjin in China's north-east. The initial Chinese reports suggested that these were the result of an oil explosion although oil doesn't explode like that. The explosions have also been likened by some to a nuclear explosions although even small nuclear explosions are about a thousand times more powerful then that.

The explosions were also significantly smaller then those typically experienced in Syria. For example in May 2014 fighters from what has since become the Army of Conquest/Jaish al-Fatah (JAF) coalition detonated a bomb in a tunnel in Aleppo province. That bomb had the equivalent power of 60 tonnes of TNT while the largest Tianjin explosion was only around 21 tonnes TNT equivalent. The US currently views JAF as the 'moderate' opposition even though their behaviour doesn't strike me as particularly moderate.

Also there is a lot of concern over whether toxic chemicals such as sulphur compounds were released in the Tianjin explosion. The United Nations is currently setting up a tribunal to examine chemical weapons use in Syria. It will be interesting to see if the US will allow it to consider all chemical weapon attacks including the Islamic State of Iraq and the Levant's (ISIL) frequent attacks using both chlorine and sulphur mustard gas.

15:25 on 13/8/15 (UK date).