End of Petrodollar??

[DirtDocMD]

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Not really a Bitcoin guy, but noticing this news on multiple sites:

Bitcoin To Benefit From The End Of US-Saudi Petrodollar Deal

In the latest development, Saudi Arabia has decided not to renew its petrodollar deal with the US. This move will allow Saudi to sell oil and other goods

coinpedia.org

Saudi Arabia is now, after a 50 year deal, choosing to accept other currencies for its’ oil.

Used to be $$=gold (gold standard).
Then it was $$=oil (petrodollar).

What is a dollar going to be “worth”, soon?? What effect will this have on the dollar over next 10-20 years??

If $$ don’t equal OIL, anymore, and China has lots more manufactured goods to trade for THEIR currency, what does OUR currency offer, besides $34 trillion in debt, and a bunch of entitled whiny babies who think we’re in the same financial position we were in 50-75 years ago??

 

[JoelJoel84]

unparalleled and unreachable military supremacy.

 

[Direct Laryngoscopy]

Multipolar world

 

[pgg]

What's the dollar backed by?

The largest economy in the world, with a significantly underexploited tax base. Also the largest military in the world (and a government that isn't shy about throwing its weight around to further its interests).

It's interesting to contemplate the long-promised decline of the "petrodollar" in the context of a world moving away from fossil fuels. Do we think it will matter how Saudi Arabia sells its oil 50 years from now?

The world is a mess. For the dollar to not be the world reserve currency, the world would need to be less of a mess. I'm not going to hold my breath.

Doomers in the crypto thread are over that way. It's a Wednesday so they're probably hyperventilating over the latest dollar move. Not sure if bitcoin has topped $100K yet "this cycle" or if it's on track to top the market cap of gold in one or two or three more cycles.

 

[pgg]

Multipolar world

China - maybe. I personally think China is ****ed for at least two if not three more generations, but maybe they'll surprise me.

Who else?

The EU is just too fractured and dysfunctional.

India is an up & comer by they're still too much of a developing country.

I'm not sure who else that leaves to be another pole.

 

[<(^_^)>]

It's interesting that the rise of US fossil fuel production has gone practically unnoticed by people on the left and right. I guess the right doesn't want to give Biden what they see as a "win" and the left doesn't want to give Biden what they see as a "loss". The US produces more oil than any other country in the world. The US produces more natural gas than any other country in the world. Saudi Arabia (and OPEC) are increasingly minor players in a market that overall is not destined for growth in the next 20-30 years. I do have some concerns about US deficit spending, but whether Saudi Arabia decides to sell significant volumes of oil in Japanese yen, rupees, RMB, euros etc. seems both unlikely and also not particularly relevant either.

 

[Direct Laryngoscopy]

China - maybe. I personally think China is ****ed for at least two if not three more generations, but maybe they'll surprise me.

Who else?

The EU is just too fractured and dysfunctional.

India is an up & comer by they're still too much of a developing country.

I'm not sure who else that leaves to be another pole.

I think the Nations that can export Energy (Saudi Arabia, Iran, Russia etc al) and goods (China, Indonesia, Thailand etc al) will collaborate to form some kind of cartel and will attempt to abandon pricing goods in US dollars and saving in US treasuries. If it’s sustainable long term is another topic.

But Sovereigns storing their savings exclusively in US treasuries looks like it’s behind us. Just look at the amount of Gold that has been purchased by countries in the East.

I think the US will be ok because we don’t rely on others for food and energy, but our productivity is expensive. I agree with your opinions on China (demographics, Communisms in general, energy and food dependence) and EU (dysfunction, socialism/communism, energy dependence, etc) in general.

America has been able to export inflation to other nations through the PetroDollar scheme, but that seems to be coming to a close as SA can collaborate with Nations in its own region for trade and security.

How the US responds to the global changes will determine how the populace thrives. But in my opinion Americans should be ready for new

 

[mdo1738]

a world moving away from fossil fuels.

 

[UscGhost]

View attachment 387968

It's only a matter of time. Battery solar tech is only getting cheaper and more efficient. Renewables are already cheaper to build than new fossil fuel plants.
Not to mention the catastrophic consequences of carbon emissions

There is really nothing that portends a positive future for fossil fuels. It's just a matter of how fast the transition is..

Never bet against technology.

 

[pgg]

View attachment 387968

Oh I don't think it's imminent. But we're talking about trends over the next few decades, if not the remainder of this century.

There's no real doubt that electrification of essentially everything is coming, and that less coal and oil will be burned. This is true for cold, hard economic reasons, not necessarily climate change reasons.

 

[UscGhost]

Oh I don't think it's imminent. But we're talking about trends over the next few decades, if not the remainder of this century.

There's no real doubt that electrification of essentially everything is coming, and that less coal and oil will be burned. This is true for cold, hard economic reasons, not necessarily climate change reasons.

Definitely not imminent but the trend is irreversible.

Climate change has just added additional incentive for the change. Oil will still have a role in manufacturing, plastics, lubricants, etc. But it will be very minor compared to energy production and transportation

 

[cytocide]

It’s okay to be number 2.

unparalleled and unreachable military supremacy.

View attachment 387962

This is spending supremacy. As soon as China takes Taiwan we can cut back on the spending.

 

[GassYous]

Not really a Bitcoin guy, but noticing this news on multiple sites:

Bitcoin To Benefit From The End Of US-Saudi Petrodollar Deal

In the latest development, Saudi Arabia has decided not to renew its petrodollar deal with the US. This move will allow Saudi to sell oil and other goods

coinpedia.org

Saudi Arabia is now, after a 50 year deal, choosing to accept other currencies for its’ oil.

Used to be $$=gold (gold standard).
Then it was $$=oil (petrodollar).

What is a dollar going to be “worth”, soon?? What effect will this have on the dollar over next 10-20 years??

If $$ don’t equal OIL, anymore, and China has lots more manufactured goods to trade for THEIR currency, what does OUR currency offer, besides $34 trillion in debt, and a bunch of entitled whiny babies who think we’re in the same financial position we were in 50-75 years ago??

The problem is that there is no viable alternative. The US is a relatively trusted, known quantity that has a huge military, an affluent population and two friendly neighbors along with two huge oceans. China's currency will never become a reserve currency because it is manipulated and untrustworthy.

The two biggest contenders (China and Russia) are facing demographic bombs in the near future that will significantly hamper their economies despite throwing their weight around now. The next biggest challenger is India (graduating over a million engineers a year) with a large, young workforce but they have quite a while to go.

 

[rowsdower88]

It's interesting that the rise of US fossil fuel production has gone practically unnoticed by people on the left and right. I guess the right doesn't want to give Biden what they see as a "win" and the left doesn't want to give Biden what they see as a "loss". The US produces more oil than any other country in the world. The US produces more natural gas than any other country in the world. Saudi Arabia (and OPEC) are increasingly minor players in a market that overall is not destined for growth in the next 20-30 years. I do have some concerns about US deficit spending, but whether Saudi Arabia decides to sell significant volumes of oil in Japanese yen, rupees, RMB, euros etc. seems both unlikely and also not particularly relevant either.

Biden has also passed the largest climate bill in the history of humankind with a zero vote margin of error while the critical swing vote came from a coal family scion in Appalachia.

But yeah, we have increased production. I'm not thrilled about it.

 

[pgg]

This is spending supremacy. As soon as China takes Taiwan we can cut back on the spending.

Don't hold your breath (on either of those things).

 

[masterPain]

Does this mean we are officially NOT going to be world currency anymore?

 

[pgg]

Does this mean we are officially NOT going to be world currency anymore?

It doesn't mean anything.

 

[narcotics999]

Does this mean we are officially NOT going to be world currency anymore?

It means the beginning.

 

[masterPain]

It doesn't mean anything.

How so?

 

[pgg]

How so?

Well first of all oil isn't the only (or even the chief) reason the dollar is the world reserve currency.

And second, a crypto news site is always going to spin any bit of news as an indicator of imminent dollar/fiat collapse and/or crypto gains.

 

[masterPain]

Well first of all oil isn't the only (or even the chief) reason the dollar is the world reserve currency.

And second, a crypto news site is always going to spin any bit of news as an indicator of imminent dollar/fiat collapse and/or crypto gains.

It’s actually the main reason it’s the world reserve currency. Tell my why oil isn’t the reason

 

[GassYous]

It’s actually the main reason it’s the world reserve currency. Tell my why oil isn’t the reason

Because it's based on trust, not oil as already outlined above

 

[mdo1738]

As soon as China takes Taiwan

 

[masterPain]

Because it's based on trust, not oil as already outlined above

The U.S. dollar's status as the global reserve currency faces increasing pressures that could diminish its long-standing superiority, despite the de-dollarization. The rise of alternative currencies from BRICS, coupled with efforts by major economies to reduce dependency on the dollar in international trade, underscores a gradual shift towards a multipolar currency system. Geopolitical tensions and evolving economic policies further challenge the dollar's dominance, as countries seek to insulate themselves from U.S.-centric financial sanctions and trade disputes.

Structurally, the U.S. economy's high levels of national debt, ongoing fiscal deficits, and expansive monetary policies pose significant risks. These factors could undermine the dollar's perceived stability and attractiveness as a reserve asset over time, potentially leading to increased volatility in currency markets. The dollar could remain pivotal in global finance, its future role may increasingly depend on the U.S.'s ability to address these challenges while managing a more competitive and diversified international monetary landscape.

 

[allantois]

All empires crumbled from within

 

[masterPain]

Who’s to blame for mismanaging the situation? It’s as bad as Nixon going off the gold standard.

O’Biden administration or Trumps fault?

 

[UscGhost]

Who’s to blame for mismanaging the situation? It’s as bad as Nixon going off the gold standard.

O’Biden administration or Trumps fault?

All of them. Bush too

Medicare spending, social security, lower taxes, useless expensive wars in the Middle East and the lack of courage to raise taxes and cut spending and reduce social security/medicare.

 

[pgg]

Who’s to blame for mismanaging the situation?

Heh

40 or 50 years of running budget deficits are to blame for US financial woes.

You can blame individual presidents if you want but you might as well blame everybody.

It’s as bad as Nixon going off the gold standard.

It's not. (And that's assuming that getting off the gold standard was wrong for the USA in the first place, which is debatable.)

O’Biden administration or Trumps fault?

Neither.


Again. Saudi Arabia selling their shrinking oil reserves in other currencies in this century is not the pearl clutching calamitous moment a crypto blog says it is.

 

[DirtDocMD]

So, what’s a Dollar “worth”, when other countries are just as likely to take a Yuan/Ruble/Rupee or oil or manufactured goods from another country (not just Saudi Arabia)?? Just talking basic “supply and demand”, for the Dollar.

So oil is going “by the wayside”?? That includes the oil WE produce as well, right?? Electrification is the future?? Who’s producing the solar panels, these days?? Electronics?? What if these countries start accepting payments in other currencies?? What if they DEMAND payments in other currencies??

I realize the USA is still the “World’s Largest Economy”. So was Great Britain’s, at one time. What happens when the rest of the World says, “You know what? We’re not investing in your $34 trillion debt/fiat currency Ponzi scheme, anymore. Your credit is no good, here.”??

Again, I’m not a Bitcoin guy. Bitcoin could be “outlawed” with the swipe of a pen/vote of a legislature, in a handful of large economies, and send its’ value to zero.

I’m just wondering if there’s a certain level of debt we’ll reach, or some other point, where other/multiple countries finally say, “You know what? Your debt level isn’t backed up with enough materials/goods/labor to justify our continued acceptance of your debt/currency.”???

 

[pgg]

So, what’s a Dollar “worth”, when other countries are just as likely to take a Yuan/Ruble/Rupee or oil or manufactured goods from another country (not just Saudi Arabia)??

That's just it though. Can you tell me, specifically, which other countries are going to start taking Yuan or Rupee or Ruble (LOL) in preference to dollars?

Seriously, Russia's fiat currency is in your top 3 of possibilities for dollar replacements?

Or China, which nakedly and unashamedly manipulates its currency and is hamstring by a communist-ish totalitarian regime and massive asset bubbles of its own and a demographic disaster that'll **** them unto the 2nd or 3rd generation?

India? A developing country with a billion people in mud hut poverty.

How's the dollar doing these days? Stronger than ever. Actually might even be inconveniently strong, since it's making our exports more expensive.

I’m just wondering if there’s a certain level of debt we’ll reach, or some other point, where other/multiple countries finally say, “You know what? Your debt level isn’t backed up with enough materials/goods/labor to justify our continued acceptance of your debt/currency.”???

Sure. We're not there yet. It's concerning how quickly our debt is escalating. But, and I mentioned this above, there's the simple fact that the only reason it's becoming unaffordable is our tax policy.

We could raise tax revenues to service the debt we have. There's no political will to do so now, because the threat the cryptocoiners etc say is imminent, isn't actually imminent. But if (when) it becomes so, the political will to raise taxes or maybe even cut some spending will be there.

The USA has fabulously low tax rates, compared to the rest of the world. The reason others keep buying our debt is because they know we still have enormous untapped ability to service it.

Also guns.

 

[DirtDocMD]

That's just it though. Can you tell me, specifically, which other countries are going to start taking Yuan or Rupee or Ruble (LOL) in preference to dollars?

Seriously, Russia's fiat currency is in your top 3 of possibilities for dollar replacements?

Or China, which nakedly and unashamedly manipulates its currency and is hamstring by a communist-ish totalitarian regime and massive asset bubbles of its own and a demographic disaster that'll **** them unto the 2nd or 3rd generation?

India? A developing country with a billion people in mud hut poverty.

How's the dollar doing these days? Stronger than ever. Actually might even be inconveniently strong, since it's making our exports more expensive.



Sure. We're not there yet. It's concerning how quickly our debt is escalating. But, and I mentioned this above, there's the simple fact that the only reason it's becoming unaffordable is our tax policy.

We could raise tax revenues to service the debt we have. There's no political will to do so now, because the threat the cryptocoiners etc say is imminent, isn't actually imminent. But if (when) it becomes so, the political will to raise taxes or maybe even cut some spending will be there.

The USA has fabulously low tax rates, compared to the rest of the world. The reason others keep buying our debt is because they know we still have enormous untapped ability to service it.

Also guns.

Well, we know BRICS is thinking about it (other currencies). No, I don’t pretend to have a specific answer.

I was just wondering if anyone thought they had a “feel” (or an opinion) for when we might FINALLY reach that “Rubicon”? Are we simply going to HOPE that nobody else gets their act together to the point that they look better than us?? Do you keep loaning your brother-in-law money, even after the wife tells you he’s out of a job (but keeps driving new cars and taking expensive vacations)??

No, I’m not planning on hoarding ridiculous amounts of gold, but do we just keep hoping the rest of the World keeps saying “Oh, the USA is good for it (debt)!”, or do decades of bad decisions FINALLY incur some consequences??? (And saying, “You and I will likely be dead before that happens.”), is a valid answer….

 

[DirtDocMD]

That's just it though. Can you tell me, specifically, which other countries are going to start taking Yuan or Rupee or Ruble (LOL) in preference to dollars?

Seriously, Russia's fiat currency is in your top 3 of possibilities for dollar replacements?

Or China, which nakedly and unashamedly manipulates its currency and is hamstring by a communist-ish totalitarian regime and massive asset bubbles of its own and a demographic disaster that'll **** them unto the 2nd or 3rd generation?

India? A developing country with a billion people in mud hut poverty.

How's the dollar doing these days? Stronger than ever. Actually might even be inconveniently strong, since it's making our exports more expensive.



Sure. We're not there yet. It's concerning how quickly our debt is escalating. But, and I mentioned this above, there's the simple fact that the only reason it's becoming unaffordable is our tax policy.

We could raise tax revenues to service the debt we have. There's no political will to do so now, because the threat the cryptocoiners etc say is imminent, isn't actually imminent. But if (when) it becomes so, the political will to raise taxes or maybe even cut some spending will be there.

The USA has fabulously low tax rates, compared to the rest of the world. The reason others keep buying our debt is because they know we still have enormous untapped ability to service it.

Also guns.

But DO we have the “untapped ability” to service it, or rather the “willing” ability?? We have lots of folks sitting around, thinking they don’t have to work or shouldn’t have to pay taxes. This “productivity” problem is one (certainly not ALL) of the reasons so much of our manufacturing has moved overseas. In effect, the World is subsidizing our standard of living, that we’ve become too lazy/entitled to pay for, ourselves. The “strength” of our currency has allowed that, but I don’t know if other countries are going to keep believing that, especially when these other “poor” countries (say, India) seem more willing to “work” for what they need.

I don’t know if we can make a case that WE don’t “manipulate” our currency. Maybe we don’t do it like China does, but I wouldn’t say we’re completely above board…..

 

[cchoukal]

I can’t help but think other countries’ willingness to buy our debt and use our currency has something, intangible
Though it may seem, to do with our traditions of democracy and democratic norms which lead to predictable, stable governance.

 

[cytocide]

I can’t help but think other countries’ willingness to buy our debt and use our currency has something, intangible
Though it may seem, to do with our traditions of democracy and democratic norms which lead to predictable, stable governance.

 

[<(^_^)>]

China is the runner up in terms of GDP, and still quite a bit behind. They're a dictatorship. The last time there was an upheaval in china (75 years ago) anyone that owned Chinese debt got a nice 100% haircut of the bond value. What happens when Xi, 71 years young, dies? There are reasons to be concerned about the future, but if you apply the same cynical "sky is falling" attitude toward any other top 20 gdp country you see what a good position the US is in relatively speaking.

 

[GassYous]

But DO we have the “untapped ability” to service it, or rather the “willing” ability?? We have lots of folks sitting around, thinking they don’t have to work or shouldn’t have to pay taxes. This “productivity” problem is one (certainly not ALL) of the reasons so much of our manufacturing has moved overseas. In effect, the World is subsidizing our standard of living, that we’ve become too lazy/entitled to pay for, ourselves. The “strength” of our currency has allowed that, but I don’t know if other countries are going to keep believing that, especially when these other “poor” countries (say, India) seem more willing to “work” for what they need.

I don’t know if we can make a case that WE don’t “manipulate” our currency. Maybe we don’t do it like China does, but I wouldn’t say we’re completely above board…..

More like we are subsidizing the rest of the world. The bretton woods agreement basically allowed for free trade for the entire world at a time when basically everyone was recovering from devastated countires/economies. Opening the US market for foreign materials/products was a godsend for everyone as was the capital and expertise sent to other countries. Prior to this there were so many wars for creating markets and obtaining raw materials from other countries. It wasn't the strength of the currency that allowed for this situation but being the only viable superpower left after world war 2.

Do you know what would happen if the USA stopped guaranteeing world security? Look at what happened when the houthis started shooting at merchant vessels or when covid started. The global supply chain is incredibly fragile and there is only one entity that allows it to work and that's the US government through its military strength.

What would happen if China started flailing and all of their factories stopped working? Production would move to Mexico, Indonesia, the Phillipines, Vietnam etc. What would happen if the US started flailing? A global depression.

 

[DirtDocMD]

More like we are subsidizing the rest of the world. The bretton woods agreement basically allowed for free trade for the entire world at a time when basically everyone was recovering from devastated countires/economies. Opening the US market for foreign materials/products was a godsend for everyone as was the capital and expertise sent to other countries. Prior to this there were so many wars for creating markets and obtaining raw materials from other countries. It wasn't the strength of the currency that allowed for this situation but being the only viable superpower left after world war 2.

Do you know what would happen if the USA stopped guaranteeing world security? Look at what happened when the houthis started shooting at merchant vessels or when covid started. The global supply chain is incredibly fragile and there is only one entity that allows it to work and that's the US government through its military strength.

What would happen if China started flailing and all of their factories stopped working? Production would move to Mexico, Indonesia, the Phillipines, Vietnam etc. What would happen if the US started flailing? A global depression.

Well, hell, I’m convinced! (And, seriously, if this was 1998, I’d agree with every word you said.) We’re not standing on the edge of a precipice (fueled by the success of the previous 75 years, when we had NO competition). We’re fine! Barkeep, put another 34 trillion on my tab!!

Exit question—Is the trend of acceptance of “other currencies” by other nations a net BENEFIT, or a negative, to the US Dollar?? (Or is it totally meaningless??)