After putting up a conspiracy theory surrounding Saudi Arabia’s threat to sell their U.S. Treasuries should they be outed for the 911 attacks, it was apparent that there could be some more discussion about the life of the Petrodollar and the U.S. dollar being the world’s reserve currency. I won’t review the theory, but the end of both is inevitable at some point in time. Also added to the mix is the fact that Central Banks aren’t doing so well and we may even see that experiment come to an end. That’s a separate issue for discussion and one that is equally important. A question asked by D13The Colonel “.who do you feel can step up with the demise of the petro dollar…..which our shale oil production has almost rendered it moot anyway…” Let’s go with the first part, who can step in should the demise of the petrodollar occur. Why does anyone have to step in? We have exchange rates with foreign currencies that can handle trade and that is happening throughout the world already, even with oil. Just because that’s the way it has been done for several decades doesn’t mean it can’t be done another way. Prior to the U.S dollar becoming the dominate currency, the world traded just fine and life went on, I see no reason why it can’t happen again.
Trade is really not a concern when it comes to the demise of the dollar as WRC. It’s the ability of the way over leveraged Federal government’s ability to keep their financial promises. As we stand today, without credit, the Fed’s will default. Is this why Obama quickly flew to Saudi Arabia after their threat of selling U.S. treasuries? Did he know, should a mass selloff occur, that the end result would be that few would buy treasuries in the future to keep propping up the failed Federal government? With the National debt soon to be 21 trillion dollars, which is 16 trillion or so more than in 2001, one has to ask, why has this occurred and what is the end result?
The debt will never get paid, ever. Should the Federal government lose the petrodollar and the WRC at nearly the same time, the effects would be brutal. The effects wouldn’t be limited to the U.S, it would literally shake the foundation of the entire world. But we are already heading in this direction. As D13 said, ” The Central Banking climate is floundering and not prospering.” The Central bank experiment is possibly coming to it’s epic end, along with the Federal Reserve’s dominate Federal Reserve Note, the U.S. dollar. At some point, things will change. These changes don’t always come when people expect them to change. So who would step up and fill the vacuum left should the U.S. dollar stop becoming the WRC (which is already happening, all be it slowly)? At the point when it’s realized, the world may not want another WRC, because the failure of this one was to painful. It’s all part of living in A Changing World.