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Politics : View from the Center and Left -- Ignore unavailable to you. Want to Upgrade?

To: zzpat who wrote (377653)	7/20/2018 4:22:46 PM
From: Sun Tzu	Read Replies (1) \| Respond to of 543076

I used the term petrodollar loosely. So let me explain a bit before we go further. The reason the US is the only country whose debt is denominated in its own currency is that USD is the defacto global currency in which nearly all trades are denominated. And this "standard" was started with OPEC agreeing to accept USD for its oil (instead of a gold-backed currency). For this system to collapse, it is sufficient that enough countries start exporting in alternate currenci(es). That currency will have to be available enough and respected enough to meet the needs of buyers and sellers. China is the only single country that can force the issue. They could, if they really wanted to, issue all their exports in euro and in the process kill the dollar (and prop up euro). Other countries will need to band together to have a real impact. But that number is still smaller than you may think. If for example, Russia, Iran, and Venezuela were to use some common currency for their oil and gas exports (again, say euro), then the system will come under sufficient stress to cause pain, even if it does not collapse. Right now nobody, including EU, wants that kind of headache. Lucky for the US, the main alternatives to USD are owned by the friends (which Trump thinks US does not have) - namely EU and Japan. But China is actually in a position to force the collapse if the US picks an all-out trade war with them. And if the SCO alliance decides to agree on a common currency (not going to happen anytime soon, but you never know) they will destroy the dollar. >> For the petrodollar to collapse, Saudi Arabia would have to have a beef with the US.