So says George Washington (washingtonsblog.com) in edited excerpts from his original article* entitled Forget Russia Dumping U.S. Treasuries … Here’s the REAL Economic Threat. (Hat tip to SeniorD)
[The following is presented by Lorimer Wilson, editor of www.munKNEE.com and may have been edited ([ ]), abridged (…) and/or reformatted (some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. This paragraph must be included in any article re-posting to avoid copyright infringement.]
Washington goes on to say in heavily paraphrased excerpts:
After Nixon took the U.S. off the gold standard, which had made the dollar the world’s reserve currency – America salvaged that role by adopting the petrodollar. Specifically, the U.S. and Saudi Arabia agreed that all oil and gas would be priced in dollars, so the rest of the world had to use dollars for most transactions.
Jim Sinclair, however, is of the opinion that should Russia carry through and sign a planned bilateral trade deal with China, where China would buy huge quantities of Russian oil and gas, and if Russia accepts payment for oil and gas in any currency other than the dollar – whether it’s gold, the Euro, the Ruble, the Rupee, or anything else – then the U.S. petrodollar system will collapse. Why? Because one of the main pillars for U.S. power is the petrodollar, and the U.S. is desperate for the U.S. dollar to maintain its reserve currency status for as long as possible and, as Zero Hedge has noted previously, the average life expectancy for a fiat currency is less than 40 years.
As the table shows, U.S. reserve status has already lasted as long as the Portugal and the Netherland reigns. It won’t happen tomorrow, or next week but the end of the dollar’s rein is coming nonetheless, and China and many other countries are calling for a new reserve currency.
Remember, China is entering into more and more major deals with other countries to settle trades in Yuans, instead of dollars and, given that China has surpassed the U.S. as the world’s largest importer of oil, Saudi Arabia is moving away from the U.S. … and towards China.
A switch to pricing petroleum in anything other than dollars exclusively – whether a single alternative currency, gold, or even a mix of currencies or commodities – would spell the end of the dollar as the world’s reserve currency. For that reason, Sinclair – no fan of either Russia or Putin – urges American leaders to back away from an economic confrontation with Russia, arguing that the U.S. would be the loser.
[Editor’s Note: The author’s views and conclusions in the above article are unaltered and no personal comments have been included to maintain the integrity of the original post. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.]
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