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this podcast says its because the usd is the dominant world reserve currency (a lot of trade is priced in usd, critically oil due to USA alliance with saudi ara

this podcast says its because the usd is the dominant world reserve currency (a lot of trade is priced in usd, critically oil due to USA alliance with saudi arabia) so there is high foreign demand for usd. they allege that keeping it this way - keeping demand for usd high - is why USA occupies the middle east. it also says that the usd is dying and that the USA's free lunch (ability to borrow endlessly without consequences) is now ending or already ended, though the politicians will deny it. they also say that if you are russia or china, the obvious move is to hire a bunch of blockchain engineers, try to unload your usd treasury bonds (forcing a financial crisis in the USA in the 2020s when the USA politicians don't realize they can't borrow anymore), and then simply wait, and when the dollar dies you can step in and "save the world" from the dying dollar with their new cryptocurrency. obviously, russia famously had meetings with Vitalek (ethereum founder) and there is a huge amount of blockchain investment happening in China right now. https://www.macrovoices.com/336-anatomy-of-the-u-s-dollar-end-game-part-1-of-5 https://www.macrovoices.com/336-anatomy-of-the-u-s-dollar-en...

sseveran 9y ago
The reason oil is priced in dollars has nothing to do with Saudi Arabia or any US involvement there. The US has always (since the 1800s) been a major player in oil markets. The NYMEX futures contract for physical oil is the real reason oil is priced in dollars. OTC physical trades often reference the NYMEX (now CME) price. So much of the infrastructure just operates using dollars but nothing is stopping anyone from not using dollars. I am not sure what blockchain engineers have to do with selling treasury bonds. The larger issue for China is that they have to do something with their dollars. It's not feasible just to dump them. Unfortunately (or fortunately depending on your perspective) the USAs ability to continue to borrow does not appear to be ending. It is true that so long as others will lend to you in your own reserve currency you can basically just keep borrowing. I didn't think that the US could borrow $20T but maybe we can borrow $50T or even more. It seems for the time being the sky is the limit.
- indubitable 9y ago
  This is false. The entire story of the petrodollar is lengthy and involves an understanding of economic arrangements in times past, how they worked, how they collapsed, and the details in between. Rather than try to write this all out here, I think an excellent post that does a very good job of summing up these intricacies is available here: https://www.quora.com/Why-is-oil-priced-and-traded-in-U-S-dollars/answer/Robert-Parker-115 https://www.quora.com/Why-is-oil-priced-and-traded-in-U-S-do... The fact that oil is settled to this day primarily in USD has everything to do with the US and Saudi Arabia. Understanding this system also helps one appreciate the relevance of very contemporary issues like China attempting to push oil producing nations to settle their contracts in yuan. It's not about the short micro level effects, which would essentially just be a currency conversion, but about the macro level effects and implications of what currency the most in demand import in the world is offered in. If China succeeds with their goal, the economic consequences for the US could not be overstated.
- dustingetz 9y ago
  > the USAs ability to continue to borrow does not appear to be ending Argument is that USA borrowing is contingent on foreign superpowers buying US Treasury Bonds, which they "started to stop" doing a couple years ago > So much of the infrastructure just operates using dollars but nothing is stopping anyone from not using dollars Other than pissing off the USA who will manufacture some moral imperative to sanction/proxywar/depose said government
dustingetz 9y ago
It's too bad that this opinion was downvoted, I've just repeated the opinions of a few famous hedge fund managers and investors who have a famously high quality podcast. These are not programmer nerd-activists who give a shit about bitcoin. Here's a page-length quote from the middle of the podcast on this idea that I liked (including one of the cryptocurrency quotes, you can C-F the podcast transcripts to find more): http://www.dustingetz.com/ezpyZXF1ZXN0LXBhcmFtcyB7OmVudGl0eSAjZW50aXR5WyIkIiAxNzU5MjE4NjA0NjM1OF19LCA6Y29kZS1kYXRhYmFzZSAic3RhcnRlci1ibG9nLXNyYzIiLCA6bGluay1pZCAxNzU5MjE4NjA0NTU1OX0 http://www.dustingetz.com/ezpyZXF1ZXN0LXBhcmFtcyB7OmVudGl0eS...,

sseveran 9y ago

The reason oil is priced in dollars has nothing to do with Saudi Arabia or any US involvement there. The US has always (since the 1800s) been a major player in oil markets. The NYMEX futures contract for physical oil is the real reason oil is priced in dollars. OTC physical trades often reference the NYMEX (now CME) price. So much of the infrastructure just operates using dollars but nothing is stopping anyone from not using dollars. I am not sure what blockchain engineers have to do with selling treasury bonds. The larger issue for China is that they have to do something with their dollars. It's not feasible just to dump them. Unfortunately (or fortunately depending on your perspective) the USAs ability to continue to borrow does not appear to be ending. It is true that so long as others will lend to you in your own reserve currency you can basically just keep borrowing. I didn't think that the US could borrow $20T but maybe we can borrow $50T or even more. It seems for the time being the sky is the limit.

indubitable 9y ago
This is false. The entire story of the petrodollar is lengthy and involves an understanding of economic arrangements in times past, how they worked, how they collapsed, and the details in between. Rather than try to write this all out here, I think an excellent post that does a very good job of summing up these intricacies is available here: https://www.quora.com/Why-is-oil-priced-and-traded-in-U-S-dollars/answer/Robert-Parker-115 https://www.quora.com/Why-is-oil-priced-and-traded-in-U-S-do... The fact that oil is settled to this day primarily in USD has everything to do with the US and Saudi Arabia. Understanding this system also helps one appreciate the relevance of very contemporary issues like China attempting to push oil producing nations to settle their contracts in yuan. It's not about the short micro level effects, which would essentially just be a currency conversion, but about the macro level effects and implications of what currency the most in demand import in the world is offered in. If China succeeds with their goal, the economic consequences for the US could not be overstated.
dustingetz 9y ago
> the USAs ability to continue to borrow does not appear to be ending Argument is that USA borrowing is contingent on foreign superpowers buying US Treasury Bonds, which they "started to stop" doing a couple years ago > So much of the infrastructure just operates using dollars but nothing is stopping anyone from not using dollars Other than pissing off the USA who will manufacture some moral imperative to sanction/proxywar/depose said government

dustingetz 9y ago

It's too bad that this opinion was downvoted, I've just repeated the opinions of a few famous hedge fund managers and investors who have a famously high quality podcast. These are not programmer nerd-activists who give a shit about bitcoin. Here's a page-length quote from the middle of the podcast on this idea that I liked (including one of the cryptocurrency quotes, you can C-F the podcast transcripts to find more): http://www.dustingetz.com/ezpyZXF1ZXN0LXBhcmFtcyB7OmVudGl0eSAjZW50aXR5WyIkIiAxNzU5MjE4NjA0NjM1OF19LCA6Y29kZS1kYXRhYmFzZSAic3RhcnRlci1ibG9nLXNyYzIiLCA6bGluay1pZCAxNzU5MjE4NjA0NTU1OX0 http://www.dustingetz.com/ezpyZXF1ZXN0LXBhcmFtcyB7OmVudGl0eS...,