However, it is becoming clear, at least to independent monetary observers, that in 2018 the dollar’s primacy will be challenged by the yuan as the pricing medium for energy and other key industrial commodities The shift from oil to other renewable energy sources could threaten the petrodollar. December 2019; November 2019; October 2019; September 2019; August 2019; July 2019; June 2019; May 2019; April 2019; March 2019; February 2019; January 2019; December 2018; November 2018; ... Petrodollar Collapse Looms As Russia Accelerates De-dollarization “Thank God This Is Happening” Russia Says Time Has Come To Ditch The Dollar Discuss. This alliance was so critical that it survived subsequent years of differences of opinion over the Arab-Israeli conflict. The petrodollar myth is a conspiracy theory for distracting the tinfoil hat crowd. “The chaos that one day will ensue from our 35-year experiment with worldwide fiat money will require a return to money of real value. Like with ants, the more a people can be made to fight each other, the easier it is to subjugate them. Timing the Collapse: Ron Paul Says Watch the Petrodollar. A sudden dollar collapse would create global economic turmoil. Norway Government Pension Fund Global--$1.187 trillion, U.A.E. That’s why I think the death of the petrodollar system is the No. Nixon officially ended convertibility of the dollar for gold to halt the gold outflow, thus ending the Bretton Woods system, on August 15, 1971. However, the United States, once the principal driver of the oil industry, will no longer be the primary source of demand. As a result, the value of the dollar plummeted. That helped the U.S. economy as its export values also decreased, making them more competitive. You absolutely must be internationalized before the US dollar loses its status as the premier reserve currency. 3 min read Today, a tectonic shift in the global monetary system seems inevitable. Invest a large amount of its dollars from oil revenue in US Treasury securities and use the interest payments from those securities to pay US companies to modernize the infrastructure of Saudi Arabia. The sustainability of the petrodollar system is linked to Middle East geopolitics. Investors would rush to other currencies, such as the euro, or other assets, such as gold and commodities. Great Wealth Strategies, LLC is a resource that looks to understand where and how wealth is created by following the personal decisions of Erik Henyon. The dollar is the preeminent global currency. Sanctions After Crimea: Have They Worked? We will know that day is approaching when oil-producing countries demand gold, or its equivalent, for their oil rather than dollars or euros. In essence, the petrodollar system was an agreement that, in exchange for the US guaranteeing the survival of the House of Saud regime by providing a total commitment to its political and security support, Saudi Arabia would: The need to use dollars to transact in oil, the world’s most traded and most strategic commodity, provides a very compelling reason for foreign countries to keep dollars in their reserves. It will be a new OPEC+, with new, Russian rules of the game, not American ones. That helps these countries avoid wide swings in inflation or deflation. Here are the world's five largest petrodollar recyclers ranked by assets:. U.S. Government Accountability Office. 1 black swan event for 2017. That’s precisely why NY Times best-selling author Doug Casey and his team just released a pressing new report, Surviving and Thriving During an Economic Collapse. The petrodollar is any U.S. dollar paid to oil-exporting countries in exchange for oil. How do we stop this deadly cycle that has killed millions in just two decades? No, at least not for the near future. They believe that as part of the US commitment to keep the region safe for the monarchy, the US should have attacked their regional rivals, Syria and Iran, by now. "Top 89 Largest Sovereign Wealth Fund Rankings by Total Assets," Accessed April 7, 2020. Access our very popular e-letter, the IM Communiqué, and our other guides and country reports. Jim Willie Predicts Economic Collapse Posted by David Montaigne ⋅ January 26, 2018 ⋅ Leave a comment I know, he has been calling it for years, but economic collapse will happen as described in this article… and when it does, a variety of end times prophecies are likely to be fulfilled, including WWIII/Armageddon. Nations are limiting greenhouse gas emissions to fight global warming. There is a threat to the petrodollar as the world shifts from oil to renewable energy. As a result, oil-exporting nations must receive dollars. In 1973, Nixon asked Congress for military aid to Israel in the Yom Kippur War. The newly-formed Organization of the Petroleum Exporting Countries halted oil exports to the United States and other Israeli allies. The petrodollar was born. What Ron Paul is referring to here is the petrodollar system. This demand is artificial, since the US dollar is just a middleman in a transaction that has nothing to do with a US product or service. It ultimately translates into increased purchasing power and a deeper, more liquid market for the US dollar and Treasuries. And while 1944 was truly a pivotal year in one of history’s most devastating conflicts of all time, it was also a significant year for the international economic system. It is simultaneously a chain, a shackle and a lethal plague for so many countries around the world. In particular, you should watch the relationship between the US and Saudi Arabia, which has been deteriorating. That way, if the dollar’s value falls, so does the price of all their domestic goods and services. As a result, the petrodollar may lose its role as the world's dominant currency. Finally, the collapse of OPEC, which served as the basis of the world system of the American petrodollar, will also benefit us. They use these funds to invest in non-oil related businesses. "Sanctions After Crimea: Have They Worked?" The US had defaulted on its promise to back the dollar with gold. Saudis Threaten to End Petrodollar. Center for Strategic and International Studies. Doug Casey and David Stockman's Contrarian Insider, Doug Casey on the Dangers of the Growing “Snitch Culture” in the US, Doug Casey on Rapidly Rising Taxes and 3 Other Imminent Dangers to Your Wealth. But it’s not just the financial implications that need to be considered. Oil-exporting nations receive dollars for their exports, not their own currency. Accessed April 7, 2020. Kimberly Amadeo is an expert on U.S. and world economies and investing, with over 20 years of experience in economic analysis and business strategy. Here’s a closer look at Biden’s new $1.9 trillion stimulus plan…. Michael Boyle is an experienced financial professional with 9+ years working with Financial Planning, Derivatives, Equities, Fixed Income, Project Management, and Analytics. For example, the United States sanctioned Iran for refusing to halt its development of potential nuclear weapons. Similarly, it hit Russia with trade embargoes for invading Crimea and creating a crisis in Ukraine.. What is the Petrodollar? If the world’s largest energy exporter and the world’s largest energy importer have their way, it may… A turning point may really be reached when you start hearing US officials expounding on the need to transform the monarchy in Saudi Arabia into a “democracy.” But don’t count on that happening as long as their oil is flowing only for US dollars. I believe this is critically important, because once the dollar loses this coveted status, the window of opportunity to take preventative action will definitively shut for Americans. “The petrodollar deal worked beautifully for 30 years,” explained Jim Rickards in early 2014. “Through the ’80s, the ’90s and early 2000s, it really did prop up the dollar. The dollar is the preeminent global currency. At that moment, I believe the US government will become sufficiently desperate and implement the destructive measures that governments throughout the world and throughout history have all taken (overt capital controls, wealth confiscations, people controls, price and wage controls, pension nationalizations, etc.). Their oil revenue dropped along with the dollar. The cost of imports, denominated in other currencies, increased. Being victorious in WWII and possessing the overwhelmingly largest gold reserves in the world (around 20,000 tonnes) allowed the US to reconstruct the global monetary system with the dollar at its center. The good news is that we will know exactly when the dollar collapse is imminent. China called for a replacement of the U.S. dollar as a global currency. Ironically, it is one of the largest foreign holders of the dollar. In 1971, U.S. stagflation prompted runs on the dollar. In addition, as macro analyst Luke Gromen, who in recent years has specialized in analyzing the petrodollar system and the US fiscal situation, has pointed out that the first two decades of the petrodollar system overlapped with the Cold War. As a result, most international transactions, including oil, are priced in dollars. At the recent Casey Research Summit, I had the chance to speak extensively with Dr. Paul on this subject, and he told me that he stands by his assessment. The geopolitical sands of the Middle East have been rapidly shifting. That increases imports, provides higher wages for government employees, and boosts the local economy. The benefits of the petrodollar system to the US dollar are indeed difficult to overstate. The rest is used to improve the nations' finances. Free yourself from absolute dependence on any one country. Iran dumped 80 tankers full of oil onto the market bonds and the petrodollar system collapse Countries are going to dump treasuries putting massive pressure on derivatives The US will be loosing the global reserve currency. "The Yom Kippur War (October 1973)" Accessed April 7, 2020. Other countries signed onto this deal in the 1944 Bretton Woods conference. These companies improve Saudi infrastructure through technology transfer. Saudi Arabia was chosen because of its vast petroleum reserves, its dominant influence in OPEC, and the (correct) perception that the Saudi royal family was corruptible. Accessed April 7, 2020. Prices remained high even after the embargo ended. In 1979, the United States and Saudi Arabia negotiated the United States-Saudi Arabian Joint Commission on Economic Cooperation. They agreed to use U.S. dollars for oil contracts. Tangible wealth out of reach of your home government. They recycle their petrodollars through sovereign wealth funds. Jim Willie – Comments on Ukraine, Syria, Dollar Collapse 6/27/14 Posted by David Montaigne ⋅ June 28, 2014 ⋅ Leave a comment Jim Willie seems to be the most insightful financial analyst, and his knowledge of global financial trends and their causes is related to global politics. This would suggest that they may feel that they are no longer obliged to uphold their part of the deal, namely selling their oil only in US dollars. “The chaos that one day will ensue from our 35-year experiment with worldwide fiat money will require a return to money of real value. The sooner the better.” (emphasis mine). "Is China Ready to Challenge the Dollar?" Subscribe to International Man. Last year’s collapse in the oil price has forced financial reality upon the House of Saud. Council on Foreign Relations. This is the essence of the petrodollar system, which has underpinned the US dollar’s role as the world’s reserve currency since the early 1970s. Were the Saudis to drop the petrodollar, they will most probably be followed by the overwhelming majority of OPEC members. The profits from these businesses make them less dependent on oil prices. They are afraid it would mean the collapse of the petrodollar system. The dollar’s role as the world’s premier reserve currency was established in 1944 by the Allied powers in what was known as the Bretton Woods international monetary system. As a result, most international transactions, including oil, are priced in dollars. Friday, March 6th 2020, will go down in history as the day of the collapse of the global petrodollar system that has existed since 1960. Guarantee the price of oil within limits acceptable to the US and act to prevent another oil embargo by other OPEC members. Making the Most of Your Personal Freedom and Financial Opportunity Around the World! Having lived and worked in the Middle East for a number of years, this is a topic I know a thing or two about. That makes their national income dependent on the dollar's value. The United States uses the power of petrodollars to enforce its foreign policy. The Saudis have even gone so far as to suggest a “major shift” is underway in their relations with the US. China influences the U.S. dollar by pegging its currency, the yuan, to it. This creates a … "1973-1974 Oil Crisis," Accessed April 7, 2020. Increase your quality of life while decreasing your cost of living. This might seem a frivolous question, while the dollar still retains its might, and is universally accepted in preference to other, less stable fiat currencies. Accessed April 7, 2020. Jim and Chuck are both obnoxious , and happy about it. By the late 1960s, exuberant spending from welfare and warfare, combined with the Federal Reserve monetizing the deficits, drastically increased the number of dollars in circulation in relation to the gold backing it. The U.S. dollars would be recycled back to America through contracts with U.S. companies. If it falls, so does their government's revenue. Israel Ministry of Foreign Affairs. NATO Review. Office of the Historian. In addition, most oil-exporting nations own their oil industries. New, here we are, nearly two years since this last installment on the Petrodollar collapse, and a couple of Black Swans later, with a New World Order underway. The central justification that the gold–backed dollar had provided as to why countries held the dollar in their reserves and used it as a medium of international trade was now gone. University of California, Berkeley. Petrodollar Wars 102: The US Dollar Gold Standard – where I talked about the various failures of the interwar period, Keynes’ grand idea that never was, and how the Americans got their way in the end. "The U.S.-Saudi Arabian Joint Commission on Economic Cooperation," Accessed April 7, 2020. Countries agreed upon the use of what’s known as the Bretton Woods system (where the IMF was born, and which defined a set of reserve currencies). “Consumer Price Index Database, All Urban Consumers,” Select “Top Picks,” Check “U.S. Many countries asked to redeem their U.S. dollars for gold. To protect the remaining U.S. gold reserves, President Richard Nixon removed the dollar from the gold standard. The US dollar’s status as the premier reserve currency is tied to the petrodollar system. The globe must be weaned off the USD. The Collapse of the International Monetary System and the Petrodollar, Part I November 28, 2014 November 27, 2014 conspiracyanalyst “There Will Be Blood”: Petrodollar Death Means A Liquidity And Oil-Exporting Crisis On Deck The faltering strategic regional position of Saudi Arabia, the rise of Iran (which is notably not part of the petrodollar system), failed US interventions, and the emergence of the BRICS countries providing potential future alternative economic/security arrangements all affect the sustainability of the petrodollar system. Between the years of 1972 to 1974 the US government completed a series of agreements with Saudi Arabia to create the petrodollar system. You don’t want to find yourself on the wrong side of history when that happens. The petrodollar is any U.S. dollar paid to oil-exporting countries in exchange for oil. MAJOR UPDATE: The Daily Banter Is Closing Down And Moving Exclusively To Email February 11, 2019; Watch Alexandria Ocasio-Cortez Rips Apart Dark Money In Politics In 5 Astonishing Minutes February 8, 2019; Eddie Haskell's State Of The Union Was An Infuriating Study In Gaslighting February 7, 2019; Let Them Eat Fake February 5, 2019 For example, if Italy wants to buy oil from Kuwait, it would have to first purchase US dollars on the foreign exchange market to pay for the oil, thus creating an artificial market for US dollars that would not have otherwise naturally existed. But many countries don’t fight back. The Coming Collapse of the Petrodollar System When historians write about the year 1944, it is often dominated with references to the tragedies and triumphs of World War II. But … Countries accumulated dollars in their reserves to engage in international trade or to exchange them with the US government at the official rate for gold ($35 an ounce). U.S. Army Corps of Engineers. Paul is essentially saying that, if we want to better understand the answer to the elusive question of “When will the fiat US dollar collapse?“, we have to watch the petrodollar system and the factors affecting it. A falling dollar hurt oil-exporting countries because contracts were priced in U.S. dollars. As a result, most of these oil exporters also peg their currencies to the dollar. Washington is not only losing its economic and military power but also its soft power that rested in Washington’s propaganda about making the world safe for democracy. A veritable treasure trove of intelligence, all at no cost. The top 10 benefits of having an offshore bank account. It has undergone attack from within, thanks to the eurozone crisis. Alert They Are Sending 50 Million Barrel Oil Bomb For 2020 Petrodollar Collapse On the 20 th of April of 2020, at around 2pm, something historic happened: WTI, short for West Texas Intermediate, crude oil futures traded at negative prices for the first time ever. Petrodollars and the System that Created It, The Decline of the Dollar vs Collapse and How to Protect Yourself, 6 Rich Countries That Own Most of the World's Oil, How the COVID-19 Pandemic Will Affect Oil Prices in 2021, China's Plan to Replace the U.S. Dollar with the Yuan, Why Countries Peg Their Currency to the Dollar, How a 1944 Agreement Created a New World Order, Top 10 Economic Predictions for the Next Decade, The Causes and Implications of Russia's Ruble Crisis, 6 Currencies Used in the U.S. Dollar Index, Laying the Foundation: Roosevelt Meets with King Abdul Aziz, Nixon and the End of the Bretton Woods System, 1971-1973, Consumer Price Index Database, All Urban Consumers, The U.S.-Saudi Arabian Joint Commission on Economic Cooperation, Top 89 Largest Sovereign Wealth Fund Rankings by Total Assets. As a bonus, you’ll receive our wildly popular read, Doug Casey’s International Man Communiqué. "Nixon and the End of the Bretton Woods System, 1971-1973," Accessed April 7, 2020. the rise of Iran which is notably not part of the petrodollar system, failed U.S. interventions, and; the emergence of the BRICS countries providing potential future alternative economic/security arrangements; and all affect the sustainability of the petrodollar system. Tags: To date, though, they have yet to match actions to their words, which suggests it may just be a temper tantrum or a bluff. Likewise today, a paradigm shift in the global monetary system also seems inevitable. It established the U.S. dollar as the world's reserve currency. SWFI. When the people fear the government, there is tyranny.”, President Biden’s Treasury Secretary, Janet Yellen recently floated the idea of taxing unrealized capital gains…. Click here to download the free PDF now. On February 14, 1945, President Franklin D. Roosevelt initiated the alliance with Saudi Arabia. He met with Saudi King Abd al-Aziz. The result was a serious drain in the US gold supply (20,000 tonnes at the end of WWII to around 8,100 tonnes in 1971, a figure supposedly held constant to this day). Additionally, the US has the unique privilege of not having to use foreign currency but rather using its own currency, which it can print, to purchase its imports, including oil. The conspiracy theory says the US dollar's value is propped up because Saudi Arabia and other countries sell their oil for US dollars. With the dollar no longer convertible into gold, demand for dollars by foreign nations was sure to fall and with it, its purchasing power. geopolitics, The concept has become known as the “petrodollar,” and a petrodollar collapse in 2018 is possible, if not likely. With Europe in shambles after World War II, the Bretton Woods agreement was formed, establishing the U.S. dollar as the world’s reserve currency while pegging it to gold.