The American Empire in a Changing World


Thursday, September 27, 2012

Chris Clancy: ''The Worst Has Yet to Come'' – Part 1

From The Moral Liberal

''Marin Katusa pulls things together nicely in this superb article:
“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.”
He continues:
“The “petrodollar” system [as it came to be called] was a brilliant political and economic move. It forced the world’s oil money to flow through the US Federal Reserve, creating ever-growing international demand for both US dollars and US debt, while essentially letting the US pretty much own the world’s oil for free, since oil’s value is denominated in a currency that America controls and prints. The petrodollar system spread beyond oil: the majority of international trade is done in US dollars.”''

No comments:

Post a Comment