Burning the house down
First,
for the definition of, and information about, <i>"petrodollars"</i>, see
https://www.investopedia.com/articles/forex/072915/how-petrodollars-affect-us-dollar.asp
<blockquote>The petrodollar system elevated the U.S. dollar to the world's reserve currency and, through this status, the United States enjoys persistent trade deficits and is a global economic hegemony.
The petrodollar system also provides U.S. financial markets with a source of liquidity and foreign capital inflows through petrodollar "recycling."
<b>Benefits of the Petrodollar System</b>
Since the most sought-after commodity in the world—oil—is priced in U.S. dollars, the petrodollar helped elevated the greenback as the world's dominant currency.
With its high status, the U.S. dollar enjoys what some have asserted to be the privilege of perpetually financing its current account deficit by issuing dollar-denominated assets at very low rates of interest as well as becoming a global economic hegemony. </blockquote>
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Tucker Carlson
2022-03-15
https://www.foxnews.com/opinion/tucker-carlson-biden-propaganda-real-crises
Saudi Arabia has traded oil exclusively in U.S. dollars for nearly half a century and that is one of the key reasons the United States has the highest living standard of any big country in the world, despite the fact that our manufacturing sector long ago collapsed. You may have wondered how that worked. Why are we still so rich? Well, this is how. Petrodollars allow our government, in short, to spend money that we don't have and that money pays for an awful lot of what we have—healthcare, retirements, the military. We could go on—everything, essentially.
As economist Gal Luft put it in interview with The Wall Street Journal today, "The oil market and by extension, the entire global commodities market, is the insurance policy of the status of the dollar is the reserve currency. If that block is taken out of the wall, the wall will begin to collapse."
What's the wall? Well, it's the U.S. economy. Not a small story, maybe even a bigger story than the invasion of Ukraine. Weird that we're not talking about it. </blockquote>
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Sundance
2022-03-16
https://theconservativetreehouse.com/blog/2022/03/16/imf-reports-the-ukraine-crisis-will-fundamentally-alter-global-economic-trade-finance-and-political-order/
<blockquote>[F]rom these moments forward something else, some other form of financial transaction process, is going to be needed for Russia and their allies to engage in commerce, banking and economic activity together.
Russia, China, Iran, Saudi Arabia, India, Brazil and other nations are now in a position of being forced to create another mechanism for trade and commerce.
The petro-dollar may factually be dropped as a part of this. The issue is not ‘if’ it will happen, the issues are how and when they will happen. Vladimir Putin was pushed into this position by the western financial response, and don’t think for a moment that China and Russia are unhappy about it.</blockquote>
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2022-03-26
https://theconservativetreehouse.com/blog/2022/03/26/interesting-map-shows-countries-who-support-western-govt-sanctions-against-russia-vs-those-who-do-not/
2022-04-09
https://theconservativetreehouse.com/blog/2022/04/09/brics-ministers-of-finance-hold-a-meeting-it-is-time-to-replace-western-financial-trade-mechanisms-and-remove-the-dollar/
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Larry Johnson
2022-03-01
https://turcopolier.com/will-the-economic-sanctions-on-russia-backfire/
<blockquote>The recent actions by Biden are likely to set in motion
disruptions in the international financial system that could
<b>end America’s status as the World’s reserve currency.</b>
...
Biden’s policy towards Russia has succeeded in solidifying ties between Russia and China that puts the United States at a clear disadvantage.
The shaking in the financial markets is just beginning.
This is likely to produce the worst of both worlds–global stagflation and inflation.
American consumers are likely to pay a terrible price.</blockquote>
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General background
These 2022-04-13 remarks by U.S. Treasury Secretary Janet Yellen illustrate the misguided priorities of much of the "elite", in particular, their willingness, even eagerness, to "burn the (financial) house down"
to the end of punishing Russia.
https://home.treasury.gov/news/press-releases/jy0714
Yellen shows she is aware of part of the problem, the effect on prices, in this very small part of her remarks (given after she waxed on at length about how bad she thought Russia's actions were):
"We are now seeing higher commodity prices that have added to global inflationary pressures and are posing threats to energy and food security, trade flows, and external balances across many countries."
For the U.S., add to that the threat to the status of the U.S. dollar as the world's reserve currency, and its role as the "petrodollar".
posted by KHarbaugh at 10:22
