TD₿: The Fraying of the US Global Currency Reserve System by Lyn Alden
TL;DR The current US Petrodollar System has inherent flaws that will continue to compound until they reach a breaking point.
Hey Bitcoiners,
Economic warfare between Russia and G7 nations continues to accelerate with the recent news that President Vladimir Putin will demand that Russia’s oil exports be paid in rubles instead of dollars.
Ever since 1974, oil has underlaid the global monetary system after the United States and Saudi Arabia reached a deal where the US military would offer them protection and in return, Saudi Arabia would price their oil in US dollars.
This was the beginning of the “Petrodollar System” as we know it today. This created enormous demand for dollars worldwide and helped maintain the US currency reserve system for nearly 50 years.
With recent developments, that system seems to have reached a breaking point. Russia, the second-highest exporter of crude oil in the world, has now announced it will stop accepting payments in dollars for its oil exports.
This is may feel like a sudden fracturing of the global monetary order but in reality, it has been fraying for many years.
Lyn Alden wrote a masterful blog post titled “The Fraying of the US Currency Reserve System” that lays out how the Petrodollar System came to be and why its days are likely numbered (12/02/2020).
I highly recommend you take the time to read this whole piece to better understand the shifting dynamics that are at play in the global monetary system today.
Tick tock next block,
Cory Klippsten
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Quote of the Day
“Russia will soon begin to demonstrate in very stark terms that in the Petrodollar system, it is the "Petro-" portion that is the true value, not the "-dollar" portion, via either price or shortages or both.” - Luke Gromen, Founder and President of Forest for the Trees
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