Will the U.S. Dollars Going to CRASH? Here is what I’m Thinking
We are all watching a new era forming.
Cryptocurrencies are the future and we are beginning to take part of it. But the question remains… will the cryptocurrencies, or related technology, cause a crash the world’s most powerful economy?
Many specialists believe that the USD currency will collapse, not because of cryptocurrencies but instead because of the Petrodollar System.
But let’s back up a bit. In 1973 a deal was struck between United States and Saudi Arabia in which every barrel of oil would be sold exclusively in U.S. Dollars and in the exchange the U.S offered weapons and protection of their oil fields from neighboring nations.
In 1975 all of the Petroleum Exporting Countries (OPEC) had agreed to price their own oil supplies in U.S. Dollars in exchange for weapons and military protection. Along with this agreement came a fast growing demand for U.S. Dollars. So the government only had one choice – Print more money.
Two wrongs with this scenario. First, the creation of more dollars in circulation allows the inflation of the prices, and second, this on-going demand for U.S. Dollars gives the government a “permission slip” to print even more money.
By the end of World War II, nearly 80% of the world’s gold was sitting in the United States Vaults, and the U.S. Dollar had officially become the world’s undisputed reserve currency.
How, theoretically, Would The U.S. Dollar Crash?
50 years ago china was pretty much self-sufficient in terms of oil, but their main power is manufacturing so they started buying oil from Saudi Arabia as far as they would grow up. In the beginning of last year (2017), china overcame the U.S. for oil imports.
But why is that important?
Well, it’s very important because china is now the world’s largest oil importer and consumer instead of U.S. There is an old saying - “the one who has the gold makes the rules”- this is pretty much the case.
China is now trying to modify the terms of the oil trade with Saudi Arabia, specifically they are working in a way to pay for oil in their own currency instead of U.S. Dollars. Currently they are still paying for oil in U.S.D that makes the Chinese leaders pretty pissed-off. They are wondering: “Why? We have the power to control this, why do we keep buying our oil in U.S.D.?”.
China is now beginning to “squeeze” the Saudi Arabia over the form of currency in which their oil trade is conducted and they are doing this by lowering their oil purchases from Saudi Arabia.
China’s Top 3 Suppliers are: 1st Russia, 2nd Saudi Arabia and 3rd Angola. From the past 3 years china as shifted purchase orders away from Saudi Arabia, and Russia as picked up what was lacking, around 5% to 15% of Chinese total oil imports. The Saudi Arabia’s portion of the Chinese imports has dropped from 25% in 2008 to under 15% in 2017, that’s because china has a determination to work a way away from the dollar.
Saudi Arabia of course would want to reverse that, because china is now the world’s largest oil importer and they want to better serve their main customer, they want to protect their primarily source of income.
If Saudi Arabia begins accepting yuan for oil, the U.S. Dollar will collapse severally from the very moment the news is announced.
This has made U.S. Government very nervous, because they now have two main problems to deal with. The constant threat of North Korea nuclear missiles and now china being pretty close to destroy “the world’s most powerful economy”.
Hope you guys enjoyed and leave a comment on the section below about your thought on this matter or if you want me to go deeper on this matter please let me know.
Be safe,
BlueDemon
