Originally Posted by shek

If you wanted to add up all the dynamic effects (and I'm not sure that Krugman didn't take this into account - remember, if you have a depreciation in the dollar, there is an offsetting benefit to strengthened US exporters now that US goods look cheaper), then you'd have to add in the costs of increased oil prices on the US macroeconomy (higher fuel = inflation = less consumer confidence = slow down in growth), the costs of increased borrowing to fund OIF operations, the costs of VA benefits over the course of the lifetime of all veterans who claim benefits, etc.

I don't have the numbers at the tip of my lobe, but from the ones that I've seen, they are at least an order of magnitude, and I believe two orders of magnitude greater than just the income from Iraqi oil if we were to have stolen every single drop of it.

The fact that we set up the IRF through the auspices of the UN (there was some mismanagement of it, but this was a function of bureaucracy and not due to corrupt intent) demonstrates that we didn't have a desire to rob Iraq of oil, and the high costs of Iraq relative to oil income would have resulted in a "cash out" from Iraq a long, long time ago. The petrodollar motivation for Iraq is weak at best, and doesn't square with the facts of OIF.