The rise of the United States economy in the 70’s and 80’s was mainly due to Nixon’s abolished the gold standard. This event was historic as it allowed the green back to be infinitely printed. Although, as in history, allowing a currency to freely float in thin air will eventually cause inflation from easy monetary policies and eventually undermine the economy.
To allow this hysteria to continue, there must be a present and future demand for the dollar, and this was accomplished when the Unites States administration signed a deal with the Saudi’s to create the petro dollar (us dollar), also known as the reserve currency. A second arrangement was also made. Any oil surplus reserves will be invested into US debt related securities. In exchange for these two arrangements the United States would provide Arms, security and military for the Saudi’s to and the greatest treasure, oil fields. Here is a good videoclip explaining the petrodollar collapse.
This was an incredible deal for the Unites States, as this allowed them to print unlimited amounts of money at the aid of support from international debt purchasers. This created explosive growth and is the one of the fundamental reasons for the so-called “American Dream”. However, the arrangement created a surreal environment for the Americans, which can not fundamentally last forever. The Petro Dollar is showing significant signs of an inevitable collapse. For example here are some interesting news headline worth mentioning
- India purchasing oil from Iran with gold.
- China and Russia bilateral trade – non dollar
- The member countries of BRIC wanting to create their own bank.
The petro dollar will only stay as the reserve currency for oil if countries are willing to accept it for exchange. If the Unites States continues to abuse their currency by printing it to oblivion, then we will probably see the doom of the petro dollar accelerate and lead to possible hyper-inflation.
How will this impact United States economy and the entire world? Here is a short documentary about the PetroDollar
For more informative economic “truth” documentaries see our documentary library (here)
As George Soros pointed out in an interview, the US Dollar will experience an engineered collapse, in order to bring “a new financial world order”. However, George Soros, is a member of the Breton Woods Committee (see here), why should we listen to him? It is precisely their system that he and his fellow policy makers devised that has created this mess we are in today. The massive trade and market imbalances that resulted in cheap money are reaching their breaking point.
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