Definitely Not A Cop said:
ChoppinDs40 said:
https://www.marketwatch.com/amp/story/reports-of-the-petrodollar-systems-demise-are-fake-news-heres-why-4e712804
Question about this article because I'm ignorant. The article claims that oil is bought with other currencies. They use the British pound as an example, but then in the example they give, they use the ticker of GBPUSD. Is that not still pricing the pound in US dollars?
GBPUSD is a forex pair that values the GBP in USD. There are numerous pairs, with EURUSD trading more volume daily than any other instrument in the world.
Oil is purchased with USD. Goes back to the fall of the gold standard and the Bretton Woods agreement and the rise of the petrodollar where SA agreed to price their oil in USD as the dollar was seen as the strongest and safest currency after the world left the gold standard.
But currencies move daily in relation to one another, If they are buying oil in GBPUSD, it most likely means they see an arbitrage opportunity to transact in one currency and benefit with the other. GPB has been failing in relation to the dollar since the end of the gold standard, but has become relatively stable in the last decade and is even looking like it might strengthen.
Petrodollar, Eurodollar.. all linked. This is a must read for the meat of this topic, though it's not an easy read. Not only is trouble brewing in the bond market and global liquidity, but it's also brewing in the currency market.
Petrodollars are eurodollars, and eurodollar base money is shrinking (ft.com)This article is more of the doom and gloom, but also an important read
The petrodollar is dead and that's a big deal (fxstreet.com)I've long stated that we are on the way to WW3. And the reason is not traditional thinking. The world has transacted in the dollar for a long time. Global liquidity is tied to the dollar, and in turn, faith in the American economy, especially treasuries. In turn, we have devalued our currency into oblivion to continue to finance and prop up not only a slowing American economy, but a slowing world economy. It isn't just about American debt. It's about world debt. And every time we devalue, we outsource the pain to the world. The world is showing sign after sign that they are tired of it and losing faith in the American economy, in American stability. We aren't going to have a war because they hate us. We are going to have a war because the countries who have been punished the most from out recklessness feel like their backs are up against a wall. They aren't leaving the dollar because they think they can do better. They are leaving the dollar because they think they can't do worse, and ultimately, they think they have no choice. There will be a fight where the west attempts to keep it's grip on the current financial structure of the world while the BRICS and possibly others are looking to break away. I personally also think the rise in precious metals lately is largely being driven by world governments and central banks buying them up, attempting to stabilize as much of their liquidity base as they can leading to this event.
"H-A: In return for the flattery, can you reduce the size of your signature? It's the only part of your posts that don't add value. In its' place, just put "I'm an investing savant, and make no apologies for it", as oldarmy1 would do."
- I Bleed Maroon (distracted easily by signatures)
