Are You Ready for the End of the PetroDollar?

 Fallout from the war in Ukraine—what I call the New Iron Curtain—seems to be accelerating the shift away from pricing all commodities in US dollars. China and Russia have been working on this for a long time, but that’s now shifting into a higher gear with Russia demanding that «unfriendly» countries pay for oil in rubles.

But even before the New Iron Curtain, the petrodollar system’s end was coming in view over the horizon.

Whether we like government intervention in the energy sector or not, burning fossil fuels to power vehicles and electric grids is being banned and penalized. Even the war has not changed this agenda. That aside, consumers want electric cars and non-carbon-emitting energy sources.

The 2050 target for many green energy goals is a long way off. But the smaller the oil piece of the energy pie becomes over the years, the less need other countries have for US dollars to pay for oil.

Long before all the war or the COVID-19 lockdowns, the world was moving away from oil for energy.

It may still have «rule of law» and the «good faith and credit of the United States government» behind it, but I don’t think these things are as important to other countries. The main reason they hoard dollars is that Saudi Arabia only takes dollars for oil. 

But don’t kid yourself that it won’t be until 2050. It could come as soon as 2030, which is a nearer-term goal for many Green agenda items. The New Iron Curtain could bring it on even faster.

As I’ve written before, a world in which the gold-dollar exchange ratio is north of $10,000 would be a very scary place.

But whether I like it or not, I see the scales tipping more and more away from the US dollar. At some point, there may be some big headline event that marks the end of the US dollar’s hegemony as reserve currency of the world. 

I can’t give you a precise prediction of when the US dollar loses its top-dog status, but I can say that I don’t want to be caught on the wrong side of history when it happens.

But if we’re talking about potential monetary regime change, I think internationalization may be the most important part of the formula.

As for the «speculate» part of the formula, that’s what we’re here for.

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Source: Independent Speculator | Lobo Tiggre