We use to fight wars over gold and other resources, but now wars - TopicsExpress



          

We use to fight wars over gold and other resources, but now wars are fought over the petrodollar. The Petrodollar System To explain this situation properly, we have to start in 1973. That’s when President Nixon asked King Faisal of Saudi Arabia to accept only US dollars as payment for oil and to invest any excess profits in US Treasury bonds, notes, and bills. In exchange, Nixon pledged to protect Saudi Arabian oil fields from the Soviet Union and other interested nations, such as Iran and Iraq. It was the start of something great for the US, even if the outcome was as artificial as the US real-estate bubble and yet constitutes the foundation for the valuation of the US dollar. By 1975 all of the members of OPEC agreed to sell their oil only in US dollars. Every oil-importing nation in the world started saving their surplus in US dollars so as to be able to buy oil; with such high demand for dollars the currency strengthened. On top of that, many oil-exporting nations like Saudi Arabia spent their US dollar surpluses on Treasury securities, providing a new, deep pool of lenders to support US government spending. https://youtube/watch?v=K9VLp0FcJ6I lewrockwell/2012/01/marin-katusa/the-demise-of-the-petrodollar/
Posted on: Fri, 26 Dec 2014 21:07:48 +0000

Trending Topics



Recently Viewed Topics




© 2015