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Oil is what matters less here. And the event itself is not that important in isolation. But as part of a larger trend of events it is completely different sto

Oil is what matters less here. And the event itself is not that important in isolation. But as part of a larger trend of events it is completely different story. The US can’t finance its debt neither keep their massive trade debts without a healthy global appetite for the dollar. American companies can’t achieve their massive competitive advantages by outsourcing a lot of production to China and paying with green YOUs unless the world keeps trading between themselves using those green YOUs. This won’t happen overnight because the major exporters in the world are sitting on mountains of USD denominated treasury bonds and it is not on their interests to see those mountains of assets turning into dust. But the trend is clear.

aylmao 2y ago
+1. I think the term petrodollar makes it seem it's all about the oil. The oil is important, but the most important part of it is the guarantee that the casino chips the USA issues can (and in fact have) to be used to buy things around the world, even when the USA isn't involved in the trade at all (for example, when India buys oil from Saudi Arabia). The overall fate of the USD as the world's reserve currency depends on a lot of factors beyond this event, but I think we also shouldn't mistake this event as unimportant. I might or might not have important consequences, but it's also a data point that's telling on other diplomatic and geopolitical trends going on in the world.
- elzbardico 2y ago
  On the good side, despite all diplomatic posturing, the system have been working really well for everybody, all those countries have massive USD reservers, and nobody really wants the dollar to crash. The appetite of american consumers have been serving the world really well, nobody wants the party to end. But american foreign police need to have some serious re-calibration if washington wants the party to go on. The times for pushing and shoving other countries are probably over.
- JumpCrisscross 2y ago
  > the term petrodollar makes it seem it's all about the oil. The oil is important, but the most important part of it is the guarantee that the casino chips the USA issues can (and in fact have) to be used to buy things around the world This isn't the petrodollar. It's the post-Bretton Woods international order. (And a reflection of the depth and openness of the American financial system.) Petrodollar refers to a specific aspect of that arrangement in which America mandated certain oil exporters only trade their oil for dollars and then reïnvest those dollars into U.S. Treasuries in exchange for military and political support. That's done.

aylmao 2y ago

+1. I think the term petrodollar makes it seem it's all about the oil. The oil is important, but the most important part of it is the guarantee that the casino chips the USA issues can (and in fact have) to be used to buy things around the world, even when the USA isn't involved in the trade at all (for example, when India buys oil from Saudi Arabia). The overall fate of the USD as the world's reserve currency depends on a lot of factors beyond this event, but I think we also shouldn't mistake this event as unimportant. I might or might not have important consequences, but it's also a data point that's telling on other diplomatic and geopolitical trends going on in the world.

elzbardico 2y ago
On the good side, despite all diplomatic posturing, the system have been working really well for everybody, all those countries have massive USD reservers, and nobody really wants the dollar to crash. The appetite of american consumers have been serving the world really well, nobody wants the party to end. But american foreign police need to have some serious re-calibration if washington wants the party to go on. The times for pushing and shoving other countries are probably over.
JumpCrisscross 2y ago
> the term petrodollar makes it seem it's all about the oil. The oil is important, but the most important part of it is the guarantee that the casino chips the USA issues can (and in fact have) to be used to buy things around the world This isn't the petrodollar. It's the post-Bretton Woods international order. (And a reflection of the depth and openness of the American financial system.) Petrodollar refers to a specific aspect of that arrangement in which America mandated certain oil exporters only trade their oil for dollars and then reïnvest those dollars into U.S. Treasuries in exchange for military and political support. That's done.