Petrodollar System Breaking Down

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In this video, I discuss the fraying of the petrodollar system, in which the Saudis and other producers sell their crude oil for US dollars, and then recycle those dollars back into US stocks and US government bonds (Treasuries).

Even though oil prices have doubled over the past 12 months, Saudi holdings of US Treasuries have decreased. China, Hong Kong, and Taiwan have reduced their holdings as well.

The US dollar-based global financial system is breaking down. In the absence of strong international and domestic buyers of government bonds, the Fed will need to continue to step in with freshly printed money as the buyer of last resort.

This suggests that inflation and dollar devaluation will be anything but transitory.

Not investment advice! Consult a financial advisor.

Don't be a bad boy and sell your oil for Euros:
https://www.thetimes.co.uk/article/saddam-hussein-ended-days-listening-to-hip-hop-on-exercise-bike-hhtzvwk0b

Petrodollars making their way to Silicon Valley:
https://qz.com/1426370/silicon-valley-is-awash-with-saudi-arabian-money-heres-what-theyre-investing-in/

Chart of crude oil prices:
https://fred.stlouisfed.org/series/DCOILWTICO

Saudi hoard of US Treasuries shrinks:
https://www.bloomberg.com/news/articles/2021-10-19/saudi-hoard-of-u-s-treasuries-shrinks-most-since-oil-price-rout

US debt clock:
https://www.usdebtclock.org/

The whole Treasury curve trades below CPI inflation:
https://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield

Fed holdings of US Treasuries continue to grow:
https://fred.stlouisfed.org/series/TREAST

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