The economic sanctions that have been imposed upon Russia have caused immense damage, but a loss of the petrodollar would be absolutely devastating for the U.S. economy. Since making an agreement with the Nixon administration in 1974, the Saudis have traded oil exclusively for U.S. dollars. Today, approximately 80 percent of all oil produced in the entire world is traded for dollars, and the “petrodollar” has become one of the foundational pillars of the current global financial system. Most Americans don’t realize this, but far more dollars are actually used outside of the United States than inside the United States, and having the reserve currency of the world is a massive advantage for us. Up to this point, there has been an insatiable demand for U.S. dollars all over the planet, and that has allowed us to enjoy a standard of living that is way above what we actually deserve.
Unfortunately, all of that could be about to change. As I have stated many times over the past year, Joe Biden is surrounded by the worst foreign policy team in U.S. history, and that is really saying something.
Thanks to this catastrophically bad foreign policy team, our relations with both Saudi Arabia and China have greatly deteriorated, and this has resulted in them developing closer relations with one another. In fact, the Wall Street Journal is reporting that it looks like the Saudis could soon start pricing the oil that it sells to China in Chinese currency…
The U.S. dollar may be on its way out as the global reserve currency.
Saudi Arabia is actively engaging in negotiations with Chinese officials to price oil sales to China in yuan instead of the U.S. dollar, the Wall Street Journal reported.
If the two countries decide to conduct business using the Chinese yuan instead of the U.S. dollar, this could mean trouble for America’s dominance as the global economic hegemon.
This would be a tremendous blow to the U.S., and the Saudis know it.
So perhaps Biden should not have called Saudi Arabia a “pariah”, and perhaps his foreign policy team should not have angered the Saudis multiple times over the past 12 months….