Click to copy, then share by pasting into your messages, comments, social media posts and websites.
Click to copy, then add into your webpages so users can view and engage with this video from your site.
Report Content
We also accept reports via email. Please see the Guidelines Enforcement Process for instructions on how to make a request via email.
Thank you for submitting your report
We will investigate and take the appropriate action.
The Petro-Dollar System is in big trouble – KSA might deliver a massive blow
In 1973 Henry Kissinger went over to the Kingdom of Saudi Arabia (KSA) and did a deal with the King – basically getting KSA (and other OPEC member countries) to use Dollars for their oil trades. This was called the Petro-Dollar System. The system is more complicated than that – it had more aspects to it - but this all that we need to know for the purposes of this video.
The US set up the Petro-Dollar System as a way of off-setting the effects of the ending of the Gold Standard which happened in 1971 with the Nixon Shock. In a way, the Petro-Dollar System could be regarded as a replacement of sorts for the Gold Standard. The Petro-Dollar System could then be called the Oil Standard.
Oil is the energy that powers so much of our modern world. Indeed, oil is the very lifeblood of the world Economy. Without oil, the whole system would grind to a halt. Oil is therefore a very valuable commodity. This is one of the reasons why oil is referred to as “Black Gold”.
In the early 70s, the US administration realised that if they could link the Dollar to oil, then they could support the value of the Dollar.
At this juncture, I should say that there are two things have kept the Dollar, and hence the US, in such a privileged position since the middle of the 20th Century - the Petro-Dollar System and the World Reserve Currency status. Both act as supports for the Dollar.
For those of you listening to this who are more visually orientated, maybe you might want to imagine two great, stone columns holding up a triangular plinth, like you see in ancient Greek architecture in say the Pantheon in Athens. The Dollar is represented by the triangular plinth.
Dollar holds the status of the World Reserve Currency and has done so ever since the Bretton Woods Agreement of 1945. It’s “King Dollar”. The WRC is important because it gives a currency superpowers - superpowers which are hard to detect by first appearances. The WRC requires that all international trades are transacted in Dollars. This artificially raises the demand for the Dollar because every country and company that trades internationally is obliged to hold Dollars in reserve.
So in summary, the Petro-Dollar System and the World Reserve Currency status act as supports for the Dollar. But more than that, they raise the status of Dollar up above all other currencies. Relative to other currencies, the Dollar automatically ranks the highest. This is why the Dollar and America is preeminent in the world.
Returning to our analogy when either one of these columns fails, the Dollar will come crashing down. It will collapse because it will lose all the remaining value it has. And because of the WRC status, it has a longer way to fall.
Both the World Reserve status and the Petro-Dollar System have been under attack in recent years.
I think that it’s fair to say the stones in both of the columns have taken a battering. They are looking rather decrepit.
In actual fact the Dollar is dying. It’s in its death throws.
Category | None |
Sensitivity | Normal - Content that is suitable for ages 16 and over |
Playing Next
Related Videos
Gold : Price action, market manipulation, price predictions, Supply & Demand etc
3 days, 12 hours ago
Interest rates & Inflation – My predictions
2 weeks, 4 days ago
The Blame Game – Central Banks & Governments
2 weeks, 4 days ago
Warning - This video exceeds your sensitivity preference!
To dismiss this warning and continue to watch the video please click on the button below.
Note - Autoplay has been disabled for this video.