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"Petrodollar Collapse: Saudi Arabia Considers
Accepting Yuan For Chinese Oil Sales"
by Epic Economist
"One silent crisis is threatening to change everything in the United States. The U.S. dollar may be about to lose its status as the global reserve currency at a time our monetary system is already cracking and inflation is debasing the value of our money. A lot is at stake right now, and if the dollar loses its hegemony on global trade, the U.S. economy is going to be in deep trouble.
Recent negotiations between China and Saudi Arabia are a major indication that the U.S. dollar is on its way out as the global reserve currency. Saudi Arabia is now is actively engaging in negotiations with the Chinese government to price oil sales to China in yuan instead of using the petrodollar. The fact that two commodity-rich countries are conducting business and about to close a billionaire deal without using the petrodollar means trouble for America’s dominance as the global economic hegemon.
For the past 40 years, the currency was one of the core staples and an anchor that helped support the U.S. dollar’s reserve status. The entire global financial system used to be based on the petrodollar, with oil producers selling their product to America and the rest of the world only in dollars, which consequently propped up the USD as the world reserve currency and reinforced the standing of the U.S. as the world's undisputed financial superpower. But things are changing fast and those days are coming to an end.
Today, China purchases over 25% of the oil exported by Saudi Arabia, and if those exports are priced in yuan, the sales would boost the standing of China’s currency, and help the Chinese currency to become the new global reserve currency. “The dynamics have dramatically changed. The U.S. relationship with the Saudis has changed, China is the world’s biggest crude importer and they are offering many lucrative incentives to the kingdom,” explained one Saudi official familiar with the negotiations. “China has been offering everything you could possibly imagine to the kingdom,” the official stressed.
Needless to say, the U.S. is getting very alarmed about the potential of this historic transformation. One U.S. official said in the interview with the WSJ that “the idea of the Saudis selling oil to China in yuan seems highly volatile and aggressive”. The official also revealed that the Saudis had floated the idea several times in the past when there was tension between Washington and Riyadh.
That’s how the pieces of the endgame start falling into place. While Russia is starving the western world of the resources it needs, which has been driving commodity prices to all-time highs, its silent partner, China, is quietly picking up the monetary pieces and taking advantage of the Western scramble to secure resources at all costs by approaching all those other "non-western" former petrodollar clients - who are also rich in other resources - to offer them a new product, the yuan, which Beijing is now actively and aggressively pushing to dethrone the dollar as a global reserve currency.
Our currency is the number one thing that we export, and if the rest of the world decides it doesn’t want dollars anymore we will be in really big trouble. This means we are going to lose the main driver that allowed us to enjoy a comfortable standard of living for so many years. And with U.S. relations with China, Russia, and Saudi Arabia rapidly falling apart, we will see the escalation of the economic tensions with other superpowers, and that is going to be a very dangerous game to play."
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"We're so freakin' doomed!"
- The Mogambo Guru
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