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Saudi to consider accepting Yuan for oil sales

33 pointsby neilfrndesabout 3 years ago

5 comments

ericmayabout 3 years ago
Doesn’t matter.<p>First, a reserve currency is just a currency that is held on reserve by central banks for liquidity, trading, and stability. The U.S. dollar is the dominant reserve currency but is just one of many. Central banks hold the dollar, but also the Yen, Euro, Pound, and other currencies.<p>Second, this is Saudi Arabia obtaining Yuan for Chinese purchases of oil, which it will then turn around and trade for dollars or whatever they feel like doing. But the strength of the dollar isn’t just the Petrodollar, it’s the US military and rule of law. It is <i>faith</i> in the American government. In China, the CCP absolutely does not give the slightest shit about your property rights, your ability to list your company on a stock exchange, or whatever other asinine things it drums up as being important to the Party. This alone without a doubt defeats any serious attempt of the Yuan to become on par with the Euro or Dollar. If China actually operates more like a democracy with human rights, property rights, and rule of law it could definitely rival $, €, £, and ¥. But until then that won’t happen. The Chinese people should be pissed at the parasitic CCP holding them back. But I digress.<p>Finally, the USD will not lose reserve currency status (again, as a currency held by central banks) because the U.S. economy is gigantic and intrinsically valuable. Even if all oil sales were denominated in Yuan or whatever, the USD would <i>still</i> be extremely powerful and held in reserve by central banks. In fact, it’s likely that the U.S. would stop experiencing trade deficits if it lost defacto domination of world market exchanges.<p>While I think Americans need to get used to a multi-polar economic world, these articles just create FUD where there is none. A much bigger problem is self-inflicted damage due to partisan politics versus an aging China.
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blable2about 3 years ago
An insinuation in the opening para is that Foxconn is Chinese; it is Taiwanese.
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anm89about 3 years ago
I don&#x27;t think many American&#x27;s understand how problematic it will be if we lose the dollar oil market.<p>The rest of the world has to produce and export things of value to create wealth. The US for the most part gave up exporting things of value over the last 30 years. Instead we export dollars and treasuries and essentially play the world&#x27;s banker.<p>For example, we can kind of sort of temporarily get away with MMT but that&#x27;s only because we have the reserve currency and the global system can take up a lot of dollar supply. Try running those same policies with failing treasury auctions and you will have people rioting in the streets as we get a taste of real inflation.
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HWR_14about 3 years ago
Given that there are rumors of widespread yuan counterfeiting, and a very political central bank, I don&#x27;t know who would want to be yuan heavy.
ratg13about 3 years ago
Article curiously avoids discussion of petrodollar recycling.<p>Perhaps the author felt they weren&#x27;t qualified to comment on the subject.
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