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The Death Of Petrodollars & The Coming Renaissance Of Macro

Unread postPosted: Sun 15 Oct 2017, 14:07:55
by AdamB
The petrodollar system is being undermined by exponential growth in technology and shifting geopolitics. What comes next is a paradigm shift... In the summer of 1974, Treasury Secretary William Simon traveled to Saudi Arabia and secretly struck a momentous deal with the kingdom. The U.S. agreed to purchase oil from Saudi Arabia, provide weapons, and in essence guarantee the preservation of Saudi oil wells, the monarchy, and the sovereignty of the kingdom. In return, the kingdom agreed to invest the dollar proceeds of its oil sales in U.S. Treasuries, basically financing America’s future federal expenditures. Soon, other members of the Organization of Petroleum Exporting Countries followed suit, and the U.S. dollar became the standard by which oil was to be traded internationally. For Saudi Arabia, the deal made perfect sense, not only by protecting the regime but also by providing a safe, ..


The death of petrodollars..

Re: The Death Of Petrodollars & The Coming Renaissance Of Ma

Unread postPosted: Sun 15 Oct 2017, 14:13:21
by pstarr
Full grammatical sentences in headlines are a must. 'Macro . . .' what?

This mess reflect poorly on this site and should be fixed or deleted. Furthermore, posts that contain only quotes or images, without comment, are not allowed by COC.

Flagged

Re: The Death Of Petrodollars & The Coming Renaissance Of Ma

Unread postPosted: Sun 15 Oct 2017, 21:21:23
by AdamB
pstarr wrote:Full grammatical sentences in headlines are a must. 'Macro . . .' what?

This mess reflect poorly on this site and should be fixed or deleted. Furthermore, posts that contain only quotes or images, without comment, are not allowed by COC.

Flagged


Maybe you should flag it 2 or 3 times, just to put an emphasis on how much you object?

Do you have any commentary on the article itself? :)

Re: The Death Of Petrodollars & The Coming Renaissance Of Ma

Unread postPosted: Mon 16 Oct 2017, 10:08:43
by asg70
I think he objects because you're linking to Barron's and not Zerohedge.

Re: The Death Of Petrodollars & The Coming Renaissance Of Ma

Unread postPosted: Mon 16 Oct 2017, 12:26:41
by Outcast_Searcher
And, unless I missed it (I skimmed it), not ONE word about:

1). It's no longer 1974, speaking of changes in technology.

2). Under the modern FX system, where currency hedging is robust and cheap, it's a moot point.

I would have expected better from Barrons.

So I guess we'll see, but one thing I am certain of -- major businesses and governments and traders are smart enough to hedge currency risks they don't want to live with -- even if Barrons and their ilk are blind to that.

And the second thing I'm certain of is once that is true -- the fallout re the Petrodollar (aside from psychological and the ignorance of the financially unsophisticated masses) should be VERY minor -- i.e. only the transaction cost and risk of putting on such hedges.

But I guess we'll see.

One big hint is that this is increasingly common news in more mainstream financial publications (i.e. Barrons), and yet there is little if any discernable market reaction. How does zerohedge "we're all doomed tomorrow" speculation explain THAT away?

Re: The Death Of Petrodollars & The Coming Renaissance Of Ma

Unread postPosted: Mon 16 Oct 2017, 13:03:12
by onlooker
The rich and powerful will always game the system to their benefit and that applies to whatever may be the preeminent currencies or currency. But this is another sign of the relative weakness of the US vis-a-vis its main competitors. We are definitely now in a more multipolar world not seen since the end of WWII

Re: The Death Of Petrodollars & The Coming Renaissance Of Ma

Unread postPosted: Sun 12 Nov 2017, 18:12:11
by onlooker
The demise of the US petrodollar is a matter of economics than of politics.
Russia is now the biggest supplier of oil to China and is a serious strategic threat to Saudi Arabia.
It's a matter of time before the Saudis starts to sell its oil to China in Yuan as well. They need China's patronage both as a buyer of oil and a way out of their one horse cart i.e. their total dependency on oil as a revenue source. The Chinese are creating industrial zones in SA and bringing in hundreds of billions of dollars in investments.
The Saudi prince was recently with President Putin to discuss buying Russian weapons including the S-400! The Saudis have to prepare for US belligerence once they decide to trade their oil in Yuan!
Once the Saudi starts selling in Yuan, so would all the gulf states if they want to survive as well. The petrodollar would end but not the US dollar. It would be considerably weaken but would remain a world currency together with a few more.
It's in the interest of the Chinese that the US economy do not deteriorate too dramatically! Nor is it for the world economy at large! Thus this Chinese offer for the US to join in the BRI projects and Chinese investments in the US. The Americans are resisting this but they know that without Chinese money and massive technological processes, they would not survive well with a great US dollar devaluation. Also, the US has industries that can benefit greatly from the BRI!
Both President Putin and Xi know this and are managing the oil and gas business together very well. The Saudis are looking to them to help them out. The key is protecting the Saudis while killing the petrodollar!
The US dollar cannot be rapidly devalued or the petrodollar killed overnight. It poses a grave danger to the world's economy and to Russia(who is still selling oil in USD and have US big dollar reserves) and China(holding 1.3 trillion USD reserves)! Wishing for it to happen, is sheer ignorance of economics.
This is the reason why both China and Russia, with wise and knowledgeable leaders, are managing this well. The US dollar has to be devalued over time!
This is one very important reason why the Russian-China's strategic alliance is critical for long term world peace and economic development. Anyone telling you that the US is in charge is ignorant of current world geostrategic development!
Militarily, the US can do nothing significant except indulge in subversive little wars! Once the petrodollar is gone, they can no longer afford their military spending!