The petrodollar is no more, and how this will affect you

[ZapThyCat]

The petrodollar, which has been in place since 1974, officially expired on June, 9, 2024.

This was a deal that was put in place to bring Arab nations and the U.S. closer together. It was designed to circulate dollars between the two regions in exchange for oil sales. As a result, oil has been a commodity that has been priced and traded in dollars. Now, as this deal has not been renewed, Saudi Arabia can trade or deal in currencies outside of the U.S. dollar; they can now trade in yen, euros, Chinese yuan and even the highly-contentious Russian ruble.

As we all know, the USD is a fiat currency. It used to be backed up by gold, but due to LBJ and Vietnam, we had to abandon the gold standard, and we signed an agreement with the top oil seller in the world, Saudi Arabia, that they would only sell oil in USD. This meant that other countries had to sell something to us, to get USD, to get oil. It essentially propped up the dollar so that we had a viable economy, seeing as we haven't been producing much in the way of tangible goods.

Now that Saudi Arabia will accept other currencies, countries are not going to be buying up our debt quite as willingly. This *could* cause a hyperinflation crisis, and with the potato-in-chief unable to do anything about it, this could spiral out of control very quickly. Once it was silver and gold, then it was gold, then it was oil holding the value of the dollar up. What now?

Thoughts?

[CessnaDriver]

It's way above my pay grade, well I don't work anymore, but it would have been. Markets did not freak out about it.

[4DSJW]

https://mises.org/mises-wire/why-end...uble-us-regime

[ZapThyCat]

The issue is that the only thing that makes a currency worth anything is the belief that others think it's worth something. Loss of confidence in the dollar is the exact reason that people have turned to things like Bitcoin to invest their money, and if you think that Bitcoin is a better place to park your dollars than the dollar then you don't have much confidence at all.
A big problem is that there's nothing to back the Dollar now. It used to be gold, it used to be oil, now it's just a game of hot potato, because nobody thinks that we are actually going to pay back the $34.8 trillion that we are indebted to. Nobody wants to be caught with dollars when the balloon goes up...

[4DSJW]

The issue is that the only thing that makes a currency worth anything is the belief that others think it's worth something. Loss of confidence in the dollar is the exact reason that people have turned to things like Bitcoin to invest their money, and if you think that Bitcoin is a better place to park your dollars than the dollar then you don't have much confidence at all.
A big problem is that there's nothing to back the Dollar now. It used to be gold, it used to be oil, now it's just a game of hot potato, because nobody thinks that we are actually going to pay back the $34.8 trillion that we are indebted to. Nobody wants to be caught with dollars when the balloon goes up...

Cat, you are putting the cart way before the horse. You are absolutely right about confidence being the only thing that supports belief in a fiat currency. And the US does indeed have a large amount of debt. But, and it is the big "but", name one currency in the world that anyone has more confidence in, more than the US Dollar. There isn't one. And there isn't likely to be one for a very long time. And if/when it does happen, (if you are paying attention) you will see it coming and have a long time to plan accordingly.
As to the increased use of gold, bitcoin, etc.; look at the total value of all those added together. They are a tiny fraction of the money held in fiat currencies. Will they increase, probably. But for now the total of those holdings are a rounding error in the total that is held in fiat currencies.

[ZapThyCat]

name one currency in the world that anyone has more confidence in, more than the US Dollar

At the moment, people have confidence in the dollar because everyone else has confidence in the dollar. But the US, with WW2 navy (Carriers), faulty F35s, a demented puppet for a president, allies dropping like flies, crummy infrastructure, crooked government, lazy populace, $34,000,000,000,000 debt that won't get paid back... it's like the Emperors New Clothes. Once someone acknowledges these facts, everyone will agree, very rapidly, and there will be more confidence in the yuan, or euro, or rupee, or just about anything more than the US Dollar.

[4DSJW]

If you do some research into the current conditions surrounding any of the currencies that you mentioned, you will find that they all have their own set of problems. The ONLY country that has an economy big enough to be able to support being a global currency, is China. Their economy is in deep ****, the Chinese government is opaque about it's finances, and most of the world generally doesn't trust them. Yes the US has a lot of problems, but no other country (at this point) comes even close to being able to do what you suggest. The US Dollar losing the "petrodollar" status will hurt for sure.

[jimmykan]

"You don't need to be good. You just need to be better than the rest."

[4DSJW]

"You don't need to be good. You just need to be better than the rest."

Yep! That always reminds me of the "advice" I heard when going camping or hiking in bear country; "You don't have to be the fastest person in your group (never hike alone), you only have to run faster than the slowest person in your group". The USD may be looking like an ugly worn out old nag, but it is the still the strongest horse in line at the glue factory. It will be an "interesting" ride!

[donalli]

Last sunday i paid 72 dollars and change for 3 punny little burgers at harry reid airport....i say bring on the hyperinflation...i aint scared anymore....only one of us will survive

[2761377]

there are two things of importance to consider here-

the end of the petrodollar is the result of political decisions by the U.S.

secondly, it will enable the BRICS countries to compete on a more level playing field. Whatever the state of the Chinese economy, which is arguable, the yuan is now positioned to overtake the dollar. the global south is the future of the world economy.

[Wil-c]

As we all know, the USD is a fiat currency. It used to be backed up by gold, but due to LBJ and Vietnam, we had to abandon the gold standard, and we signed an agreement with the top oil seller in the world, Saudi Arabia, that they would only sell oil in USD. This meant that other countries had to sell something to us, to get USD, to get oil. It essentially propped up the dollar so that we had a viable economy, seeing as we haven't been producing much in the way of tangible goods.

Now that Saudi Arabia will accept other currencies, countries are not going to be buying up our debt quite as willingly. This *could* cause a hyperinflation crisis, and with the potato-in-chief unable to do anything about it, this could spiral out of control very quickly. Once it was silver and gold, then it was gold, then it was oil holding the value of the dollar up. What now?

Thoughts?

it was and still is the world's reserve currency based on the agreement with the Saudi's. This forced everyone else in the world to hold dollars and allowed DC to inflate the currency without actual massive inflation domestically.

BRICS is in the process of creating a metals (gold) backed reserve currency and there's no other logical reason for the Saudi's to make announcements such as this other than they can see the writing on the wall. The deal they cut with DC they know is something they can no longer count on owing to the economics of the current geopolitical situation.

The reserve currency BRICS is creating is going to effectively end the dollar as a reserve currency and it will become effectively worthless. Other countries will abandon it for the new reserve currency owing to distrust of the dollar and what DC has done & is doing with it.

most likely it'll ultra hyperinflation as it gets dumped that'll be the end of it. It appears this is already starting evidenced by the japanese bank that is selling off the US government bonds it's holding.

where does that leave us? wiemar germany & argentina tenfold comes to mind.

[DrjonesUSA]

As we all know, the USD is a fiat currency. It used to be backed up by gold, but due to LBJ and Vietnam, we had to abandon the gold standard, and we signed an agreement with the top oil seller in the world, Saudi Arabia, that they would only sell oil in USD. This meant that other countries had to sell something to us, to get USD, to get oil. It essentially propped up the dollar so that we had a viable economy, seeing as we haven't been producing much in the way of tangible goods.

Now that Saudi Arabia will accept other currencies, countries are not going to be buying up our debt quite as willingly. This *could* cause a hyperinflation crisis, and with the potato-in-chief unable to do anything about it, this could spiral out of control very quickly. Once it was silver and gold, then it was gold, then it was oil holding the value of the dollar up. What now?

Thoughts?

Well a friend of mine was pretty darn certain that the collapse was imminent several years back, and may or may not have sunk a lot of money into gold & silver. Well, here we are & no crash.

The market can remain irrational longer than you can remain solvent.

My friend definitely doesn't regret buying all that gold & silver, but...... yeah.
Point is; I have no idea, but you should definitely buy gold & silver. They aren't a "get rich" scheme; they're a "protect your wealth no matter what could ever happen" asset. They've done that, and in fact haven't really performed too poorly at all, seeing as how my friend was buying silver when it was below $20 and gold below $2,000..... check current prices & see for yourself.

[Wil-c]

Well a friend of mine was pretty darn certain that the collapse was imminent several years back, and may or may not have sunk a lot of money into gold & silver. Well, here we are & no crash.

The market can remain irrational longer than you can remain solvent.

My friend definitely doesn't regret buying all that gold & silver, but...... yeah.
Point is; I have no idea, but you should definitely buy gold & silver. They aren't a "get rich" scheme; they're a "protect your wealth no matter what could ever happen" asset. They've done that, and in fact haven't really performed too poorly at all, seeing as how my friend was buying silver when it was below $20 and gold below $2,000..... check current prices & see for yourself.

people have been predicting an economic crash for a long time now owing to the federal debt, the ability to inflate the dollar being a major reason it hasn't happened. Perhaps more so it's reserve currency status and the basis for that. This situation is different, it affects the ability to inflate it and it's basis of so-called 'value' directly.
The dollar as it exists nowadays is a house of cards, there's no denying that.

The dollar has 'value' only because it is needed, oil sales, otherwise it has no intrinsic value. The only other reason people want dollars is they trusted the political and hence economic stability of this country. Both of which everyone can see what the current status of that is, very shaky.

As soon as that need is eliminated, and that is happening as Saudi Arabia has either joined BRICS or applied for membership, the same for the supposed trust people have in that currency.
It'll be abandoned and what BRICS is creating will become what people & countries use. How will that play out? Likely there'll be a massive abandonment of the dollar & the hyperinflation of everyone dumping the dollars they hold will destroy it.

Trump being elected changes things. Does he know the situation? No doubt he does. So what can he do about it? I have my suspicions as to what he's up to with revealing the JFK files if he does so. As that will point straight at this situation in a lot of ways.

Had harris been elected I'd say that situation is coming as her and those behind her have no desire or knowledge of what to do about it. So far the only thing they appear to want to do about it is to start a war to try to stop it. Utter insanity.

As for gold and/or silver, I agree it is wise to hold part of one's wealth in the PHYSICAL holding of those. Gold holding certificates are paper, that's all they are. I know people who claim they own gold however they have holding certificates, in the end they hold emergency toilet paper.

What you can stand over & defend with a rifle if needed is what you actually own.