4 ms·

I cannot understand why the petrodollar myth persists but here we are so I'll break it down: 1. Oil is traded in dollars because dollars are a reserve currency

I cannot understand why the petrodollar myth persists but here we are so I'll break it down: 1. Oil is traded in dollars because dollars are a reserve currency. 2. Dollars are not a reserve currency because of oil.

slim 5y ago
You mean saudi arabia could trade oil for euro if they wanted but saudis actually prefer to not diversify their assets because they are stupid ?
- fuzzylightbulb 5y ago
  Their currency is pegged to the USD so its not a huge surprise their central bank prefers it. This of course has not stopped them from issuing euro-denominated bonds and holding other assets. Either way it makes a ton of sense for them to trade an extremely volatile commodity (oil) for a stable currency. This is what allows them to borrow internationally and attract outside investment. If they floated their own currency it would be a disaster. But yes they absolutely could do this and it would not impact the value of the dollar in any appreciable way. The Riyad would tank and Vision 2030 would be dead in the water.
fallingfrog 5y ago
We either coup, sanction, manipulate with predatory loans or invade every country that tries to sell its resources for something other than US dollars, or nationalize their natural resources, or seize property from United States corporations. The goal being that raw materials are kept cheap and that cheap goods continue to flow into the USA. And it’s our ability to print infinite amounts of money that in turn makes it possible for us to fund such an oversized army. It’s just an empire, by other means. If that’s not true, perhaps you can name a single exception? Sure, without coercion the dollar would still be the reserve currency for a while just on momentum. But keeping it that way requires a bit more. Or, a lot more. From https://williamblum.org/essays/read/overthrowing-other-peoples-governments-the-master-list https://williamblum.org/essays/read/overthrowing-other-peopl... Instances of the United States overthrowing, or attempting to overthrow, a foreign government since the Second World War. (* indicates successful ouster of a government) China 1949 to early 1960s Albania 1949-53 East Germany 1950s Iran 1953 * Guatemala 1954 * Costa Rica mid-1950s Syria 1956-7 Egypt 1957 Indonesia 1957-8 British Guiana 1953-64 * Iraq 1963 * North Vietnam 1945-73 Cambodia 1955-70 * Laos 1958 , 1959 , 1960 * Ecuador 1960-63 * Congo 1960 * France 1965 Brazil 1962-64 * Dominican Republic 1963 * Cuba 1959 to present Bolivia 1964 * Indonesia 1965 * Ghana 1966 * Chile 1964-73 * Greece 1967 * Costa Rica 1970-71 Bolivia 1971 * Australia 1973-75 * Angola 1975, 1980s Zaire 1975 Portugal 1974-76 * Jamaica 1976-80 * Seychelles 1979-81 Chad 1981-82 * Grenada 1983 * South Yemen 1982-84 Suriname 1982-84 Fiji 1987 * Libya 1980s Nicaragua 1981-90 * Panama 1989 * Bulgaria 1990 * Albania 1991 * Iraq 1991 Afghanistan 1980s * Somalia 1993 Yugoslavia 1999-2000 * Ecuador 2000 * Afghanistan 2001 * Venezuela 2002 * Iraq 2003 * Haiti 2004 * Somalia 2007 to present Honduras 2009 * Libya 2011 * Syria 2012 Ukraine 2014 * Bolivia 2018 * And probably, now Guinea 2021 * And that’s not even considering the dozens of countries we have sanctions or embargoes against or the ones we’re actively bombing. Or the ones we’ve manipulated through predatory financial instruments. Considering the oceans of blood we’ve spilled to maintain the dollar empire it’s honestly a little bit insulting to suggest it’s all based on good feelings or some such nonsense. It’s maintained at the barrel of a gun, baby. You don’t build a globe spanning empire by being nice.
- fuzzylightbulb 5y ago
  I get it: US is big and bad and really mean. But no one is arguing that "good feelings" are the basis for anything. And it doesn't change the fact that the petrodollar myth completely confuses cause and effect, at such a basic level that it is laughable. This remains true even if you copy/paste a long list with zero support of your underlying claim, namely that every single one of these military actions was done primarily to prop up the USD "empire" as you call it. More USD change hands every day than the total value of oil sold in a year. Its just not a factor. The use of USD as a reserve currency certainly is a net positive for the US, but the theory that we start major wars over that is not supported by the evidence. Hell, the price of oil and the value of the dollar more often than not have an inverse relationship traditionally based on empirical evidence, which is the opposite of the petrodollar conspiracy theory.

slim 5y ago

You mean saudi arabia could trade oil for euro if they wanted but saudis actually prefer to not diversify their assets because they are stupid ?

fuzzylightbulb 5y ago
Their currency is pegged to the USD so its not a huge surprise their central bank prefers it. This of course has not stopped them from issuing euro-denominated bonds and holding other assets. Either way it makes a ton of sense for them to trade an extremely volatile commodity (oil) for a stable currency. This is what allows them to borrow internationally and attract outside investment. If they floated their own currency it would be a disaster. But yes they absolutely could do this and it would not impact the value of the dollar in any appreciable way. The Riyad would tank and Vision 2030 would be dead in the water.

fallingfrog 5y ago

We either coup, sanction, manipulate with predatory loans or invade every country that tries to sell its resources for something other than US dollars, or nationalize their natural resources, or seize property from United States corporations. The goal being that raw materials are kept cheap and that cheap goods continue to flow into the USA. And it’s our ability to print infinite amounts of money that in turn makes it possible for us to fund such an oversized army. It’s just an empire, by other means. If that’s not true, perhaps you can name a single exception? Sure, without coercion the dollar would still be the reserve currency for a while just on momentum. But keeping it that way requires a bit more. Or, a lot more. From https://williamblum.org/essays/read/overthrowing-other-peoples-governments-the-master-list https://williamblum.org/essays/read/overthrowing-other-peopl... Instances of the United States overthrowing, or attempting to overthrow, a foreign government since the Second World War. (* indicates successful ouster of a government) China 1949 to early 1960s Albania 1949-53 East Germany 1950s Iran 1953 * Guatemala 1954 * Costa Rica mid-1950s Syria 1956-7 Egypt 1957 Indonesia 1957-8 British Guiana 1953-64 * Iraq 1963 * North Vietnam 1945-73 Cambodia 1955-70 * Laos 1958 , 1959 , 1960 * Ecuador 1960-63 * Congo 1960 * France 1965 Brazil 1962-64 * Dominican Republic 1963 * Cuba 1959 to present Bolivia 1964 * Indonesia 1965 * Ghana 1966 * Chile 1964-73 * Greece 1967 * Costa Rica 1970-71 Bolivia 1971 * Australia 1973-75 * Angola 1975, 1980s Zaire 1975 Portugal 1974-76 * Jamaica 1976-80 * Seychelles 1979-81 Chad 1981-82 * Grenada 1983 * South Yemen 1982-84 Suriname 1982-84 Fiji 1987 * Libya 1980s Nicaragua 1981-90 * Panama 1989 * Bulgaria 1990 * Albania 1991 * Iraq 1991 Afghanistan 1980s * Somalia 1993 Yugoslavia 1999-2000 * Ecuador 2000 * Afghanistan 2001 * Venezuela 2002 * Iraq 2003 * Haiti 2004 * Somalia 2007 to present Honduras 2009 * Libya 2011 * Syria 2012 Ukraine 2014 * Bolivia 2018 * And probably, now Guinea 2021 * And that’s not even considering the dozens of countries we have sanctions or embargoes against or the ones we’re actively bombing. Or the ones we’ve manipulated through predatory financial instruments. Considering the oceans of blood we’ve spilled to maintain the dollar empire it’s honestly a little bit insulting to suggest it’s all based on good feelings or some such nonsense. It’s maintained at the barrel of a gun, baby. You don’t build a globe spanning empire by being nice.

fuzzylightbulb 5y ago
I get it: US is big and bad and really mean. But no one is arguing that "good feelings" are the basis for anything. And it doesn't change the fact that the petrodollar myth completely confuses cause and effect, at such a basic level that it is laughable. This remains true even if you copy/paste a long list with zero support of your underlying claim, namely that every single one of these military actions was done primarily to prop up the USD "empire" as you call it. More USD change hands every day than the total value of oil sold in a year. Its just not a factor. The use of USD as a reserve currency certainly is a net positive for the US, but the theory that we start major wars over that is not supported by the evidence. Hell, the price of oil and the value of the dollar more often than not have an inverse relationship traditionally based on empirical evidence, which is the opposite of the petrodollar conspiracy theory.