President Biden has not done a great job on economic issues, and things are about to get a lot worse for his administration. One of the main things that has kept the American dollar from being totally worthless is the fact that oil is traded in American dollars. That is now changing.
WallStreetMojo explains the Petrodollar as follows:
The petrodollar history stems from the Soviet Union’s breakdown (1991), following which the US became the only superpower throughout the materialized unipolar world. Subsequently, the world observed several destabilizations and crises to sustain the leadership of the petrocurrency structure.
The term emerged in 1973 when the US agreed to offer armed protection to Saudi Arabia. It also provided weaponry and other military supplies in an agreement involving the overall sale of oil in US dollars. Moreover, Saudi Arabia would recycle the surplus dollars into the American economic system using US treasury bills and bonds.
By 1975, all OPEC members embraced the petrocurrency arrangement and consented to oil export in US dollars. As a result, the American currency now contributes to almost two-thirds of the international economy. It is the reserve currency for most central banks worldwide since the US dollar is the chief currency needed for natural gas and oil trading.
On Wednesday, PJ Media reported the following:
The petrodollar — a term describing the post-WWII global system of trading in oil almost exclusively using the U.S. dollar — has literally built and buttressed the U.S. empire for decades.
Saudi Arabia has long been a stalwart supporter of the U.S. petrodollar, which it adopted in exchange for security provided by the dominant U.S. military.
But that arrangement may be about to change.
Via TVP World:
Saudi Arabia, the world’s largest crude oil exporter, is open to discussing oil trade settlements in currencies other than the U.S. dollar, Saudi Minister of Finance, Mohammed Al-Jadaan, told media outlet Bloomberg in Davos on Tuesday.
If the Saudis were to open to talks about oil trade arranged in non-dollar currencies it would represent a significant threat to the current dominance of the U.S. dollar in the global oil trade.
Saudi Arabia is just the latest rat to contemplate leaving the sinking ship. Ghana recently announced intentions to purchase oil in gold instead of U.S. dollars moving forward. Russia, China, Brazil, India, and South Africa (BRICS) are reportedly cooperating to develop a “new global reserve currency.”
President Obama was put in place to manage America’s decline–not to make America great again. President Biden is finishing what President Obama began.